"Over the long run, companies and individuals fly less if ticket prices increase significantly."
I don't know if you missed what the industry has been doing over the last number of years, but they have been raising fares and cutting capacity if necessary if demand fell off. The airlines are not yet at the margins they want, and fuel isn't the only cost. They could use a fare increase and if demand falls off, cut capacity. The industry might go for it. Weather has bitten them, and fuel is at the high end of the range and who knows what will happen going forward. They should get ahead of things. As an investor, I'd like to see that.
That sounds good to me. I don't have a copy of the old quarterly estimates for LCC and AMR, but I believe the total revenue assumed in the estimates was low relative to their PRASM and ASM increases reported for the quarter month by month. A tweak lower on fuel and a tweak higher on revenue should bode well. I imagine a lot of extra expenses in the quarter getting things done and starting the merger process, but that should be looked past.
todd ... so you are saying if AAL's VWAP increase $1, the amount of shares extra that AAMRQ holders gain will equal the number of shares lost in conversion of the preferred?
I don't know about that. The two formulas are different, they would have to give different amounts of shares. (AAMRQ is still on the winning side.) I'll look closer at the impact of labor, but don't think changes with labor subtracted out is enough to get it to 1:1 share exchange.
" Still trying to understand 1.148 and how the shares in excess affect AAMRQ."
I've always took that to mean that you figure the AAMRQ amount using whatever the VWAP is and without regard to how high it is (even over the cap), but then subtract out the shares that are in excess of the cap. And you figure out the excess by figuring the what the debtors get at the VWAP (96.5) and subtract what the debtor get converting at the cap. That's what I figured it to be. What happens to those shares? Maybe never issued. I don't think they sneak back in during the true-up (but haven't looked at that.)
I tried to talk about this, but didn't get anywhere. I back computed the Value Hurdle Price (VHP) from D1 and saw no major reason why it should change in D2 assuming no disputed claims changed. Using the VHP as a constant gives you a number pretty darn close to .175.
Obviously, meant $37.50 breakout range ... have another stock in the $34.50 range (probably reason for typo). Still the move down today initially was so obviously a gap filling.
Thanks ... just looking at the numbers for 37 and 40 you had, I knew something was subtracted out but wasn't sure what you did ... I didn't work through adjusting Stoxxer formula to have it account for the saved preferred conversion shares. Now we just need to get above the cap.
Todd ... it can be a good deal. You have to set up a brokerage acct for them, if they don't have one. But after that it is a matter of deciding on the "lot" to gift and fill out a sheet of paper ... if the same brokerage, it is a journal entry transfer ... they get your cost basis. Have a good understanding how, when, etc. they will decide to sell the shares in their account ... and hopefully they won't go to Vegas ... but you don't sound like you have kids that would do that.
Just think about where it impacts your taxes and where it impacts their taxes ... net it out and see if it helps.
" I was in at the 2s and 3s as well and on and off to 11s and 16s..). "
apkagk ... well, one of the old LCC guys ... what was your old alias? "apkagk" was just made up a few months ago.
The cap price relates to the conversion price of the preferred, not the VWAP. The max conversion cap is computed to $35 (separately from other definitions ... set it aside to compare), and the conversion price at any distribution is 96.5% of the VWAP and that discounted amount can't exceed $35 when compared.
Ok ... I only roughly worked out the conversion cap and thought you also were saying it was $35, but then discounting the cap. So, we were using different number with the same fundamental understanding. When you were using "CAP" with the VWAP it led to my misunderstanding. I didn't see the $33.808 number except on the board and just assumed you discounted from the cap. Same page now.
That said, I think if it is exceeded AAMRQ can still get more, it will just be reduced somewhat.
I think Uncle is talking about his total portfolio's gains for today, which happens. I imagine from what others have said ... there are more with advances like that ... but there are two more D's to go ... but it is looking good.
The 3.8% is added on above 200,000 (single)/250,000 (married) ... and also added to the 20% as well as the 15%.
This year both you and your spouse can gift $14,000 each to as many individuals as you want (without having to fill out the gift tax form, which just will limit your estate you can leave without incurring taxes ... married that's about $10 million, less the amount you over gift each year.) I've always limited my gifts so haven't looked at the tax form you'll have to fill out if you exceed the $14,000 ($28,000 married). I think the tax form is a 709, or something like that. (Look at it if that's a factor to confirm what I'm saying).
If AAL stays in around this price, expect 2 more of those amounts. Then if some of the disputed claims are disallowed, expect more in the true-up (or, earlier if resolved earlier). But manage her expectations.
iky ... I think Parker once said that they purchase it a number of weeks, maybe a month out. But as stoxxer indicated LCC doesn't hedge ... other airlines do, so their hedging gains/losses would have to be netted against their monthly contract purchases to get a final fuel cost for whatever the accounting period.
Fuzz was talking about the longer term outlook for fuel.
" Are they minors? "
apk ... Gee, I thought I said if they were in college? I certainly know you can have a minor in college, but no, I was assuming they were a "major"... and even considering once out of college ... single or married (married is $74,000) ... but if passed the income limits, they would pay 15% ... but long term cap gains are now progressive, so even then it might help. Of course, there are always considerations ... and I can name a few (you may or may not lose them as an exemption) ... So, you may need a "good" AAMRQ type gain to make it a good deal.
Hey, I was just offering a possibility to consider ... and not a bad one if one is in the right situation.
The report looks good.
There was an article over the weekend that talked about the challenges of cargo this year. AAL reported a 14% increase in year over year tons ... I imagine cargo pricing had to be good also (I think FedEx put through a price increase)
"At the cap that transfer stops."
JML ... What AAMRQ got below the cap had nothing to do with what happened to AALCP ... there was no connection (though many didn't understand that apparently) . Above the cap it matters. Just the opposite of what you are saying. What AALCP gets to keep (that portion of shares above the cap not taken away from AALCP) is subtracted from AAMRQ's extra shares above the cap and does become relevant. AALCP is only part of the AAMRQ formula above the cap.
aag ... yes, I get a figure up there, but it's hard to figure because it depends on what AAMRQ gets (and I have a lot of numbers floating around about what AAMRQ gets, depending on disputed claims, etc). It certainly seems like it should be more than the 46 million. If the way to figure it is by taking 23.6%(544-AAMRQ shares) then AAMRQ gets a little over 335 million shares. Maybe that's possible with the disputed claims, and I have to say I haven't worked that out carefully.
Thanks JML ... I'll chew on that for awhile. I was using a the other definition. I don't know why they would be different, except when I look at the one I'm using from the BK docs, it does refer to New Common Stock "authorized and issued". And there has been the discussion of some shares not being issued ... or missing for now.