unc ... I was just talking about their cash and investments "balance sheet"... unrestricted $9 billion at the end ... $9.9 billion total and a 1.1 billion revolving credit as of Q1 ... more to come in Q2.
But understand you are throwing out items from a cash flow statement going forward. They do have plans for their cash. Regardless, they said they are going to carry more cash than necessary during integration.
Figuring out where to buy can be tough. On the one hand, even though there is negative press/issues, the economy and/or industry will resolve those over time, and fundamentally, the airlines are making good money regardless. That said, there is a gap just above $40 that could be filled, and technically the breakdown has a target value in the $39s ... some comments have placed it lower, but I think that is pushing it.
One thing that appears to be changing is that the transport index is starting to move up and its MACD has turned ... could make it hard for the airlines to move counter to that. Especially if the index is reading the economy as strengthening. That solves a lot of problems.
Nothing is easy.
Stoxx // BTW LUVs //
I have a question. Let's say LUV has 20% of the domestic market (don't hold me to the percentages) and they try to increase their system by 10% or a 2% increase in market share. The legacies controlling 65% of the domestic market compete for that 2%. It's only 2%/65% of their domestic system, but 10% of LUV's. Does that matter?
// reflecting Brent forecast of $66 and $82 respectively //
That means they have the right estimates as long as you adjust it as oil changes from their assumptions.
Brent at $82 ... wonder what the frackers will do?
Being an airline professor, you do realize that prasm can drop without fares dropping, don't you? And some of the prasm weakness is in that category. Some isn't. We just came through some real weakness in economic activity. So, economic activity in the 2H is in question. Should it be?
This $38-40 area is probably it. The $35 area may be pushing it. If prasm even holds in this area for next year, synergies come in, and oil surprisingly stays between $55-65 (for Brent) during 2016, earnings in 2016 will be quite a bit higher than current estimates (but who knows about oil ... currently 2016 estimates assume higher oil and not a very optimistic view of either prasm and/or synergies. All three, prasm, synergies and oil could surprise.
UAL report Q2 prasm in cents (which is what you need to figure revenue anyway) ... had to chuckle ... the media is probably stymied since they don't know if it is up or down.
Although it is always good to see capacity discipline, could this tweak to capacity be the result of starting the res change over earlier than initially planned? It was my understanding that the res change over would result in some route realignments, which would have some capacity drawdown, and having it start earlier in 2015 would obviously cause to some degree an earlier adjustment to capacity from 2015 planned capacity.
// No idea whether oil can stay at $60. Seems plausible on the fundamentals //
Especially considering "refracking" opportunities, the marginal producer costs makes that possible, and other costs for regular fracking are coming down.
On the other side, most of OPEC has to pump to help make their budgets. I'll gladly accept $55-65 oil ... 2016 estimates are using a higher oil price (or at least some other negative view with prasm and synergies).
cav ... if after tax eps is used, the PE would just move up about 50% to the 12-13 range, as it did for all the other airlines that had to report after tax earnings after they've been reporting pre-tax earnings.
Was DAL's stock price altered when they switched? This happened to LCC a number of years ago as well.
Any capacity tightening, I would expect to come after Labor Day and more likely going into the winter. Q3 still has the bulk of their summer schedule. I think last year, AAL had a weaker prasm in Q3 2014 than DAL (have to look it up) because of VZ. Maybe yoy stats can look comparatively better ...
DAL's margins are strong though.
Wasn't the date for the start of switching some LCC flights to the AAL res the 17th of July? If so, anyone hear of any glitches with any of the switched flights? I imagine by the earnings CC, AAL might be able to say something on how it is going ... if it started on the 17th.
cav ... It's not what I think, it is what analysts are using to model their target stock prices. If you take an analyst's eps estimate and divide it into their target you'll get their "modeled" PE. And I think most are around 8 (under pre-tax reporting). Keay mentioned he was using 8.5 to get his target. As eps has been taken down recently, target prices have moved down, but the PE has generally stayed the same for target stock price reasons.
Sure, after a number of years of good earnings and balance sheets improve (nothing like profits to improve balance sheets), and the airlines show they can do well over the business cycle, the market may expand multiples. Having said that, once in an after tax situation, target prices shouldn't change ... just PE's expanding to an after-tax PE. Otherwise why don't analysts say the target price is "this or that" using pre-tax and a different target using after tax earnings.
cav ... thought VZ was slight to about .5% in Q1 and Q2 (mostly Q2) 2014 but then went to 1.5-2.0% in Q3 and Q4 ... guess we'll find out. Yes, there is that domestic glitch ... hope it is resolved going into the fall.
cav ... right now target prices are using about 8-9 times whatever the analyst has for eps. Are you saying that as they report after tax eps, the analysts are going to drop target prices about 35%?
DAL and AAL have about the same tangible net assets on their BS. Actually DAL was right to pay down their debt, though with other liabilities added, it has the same total liabilities as AAL. DAL was essentially financing their "goodwill" prior to paying down debt (they have more goodwill than AAL).
// It doesn't work that way, even when they switch they'll add back in "special items", so take $6.84 as it is.
DAL switch in 1Q14. //
unc ... you just talked about an apple, orange and a peach
unc ... we were just talking about targets (in general), not what the market is doing now, but thanks for reminding us to "Right (y)our minds".
I agree with you, bearsrunfrombuls. Depending on what you want to estimate for fuel and synergies, they do between $7-10, and most likely $8.