unc ... I had a "moment" and couldn't find the envelope with my figures, so I refigured quickly. Not as bad as I recalled. I think if AAL beats UAL's unhedged fuel by what you said is historical, AAL can at least meet the $1.53 (assuming average revenue estimates are right and midpoint costs). Your $2.49/gal adds some comfort. Okay ... all is well in a Saturday of panic.
Now, I have to get back to "other" estimates needed in a few days ... but that will keep me at the computer ... what a way to spend a Saturday.
Pretty terrible situation ... it sounds like the captain probably made a bunch of decisions that put the aircraft in a situation where they were faced with the wrath of mother nature, and mother nature either overwhelmed the capabilities of the aircraft or overwhelmed the capabilities of the pilots.
// It cost DAL about $2/gallon to hedge the past quarter //
I would "guess" since I haven't seen the accounting and the article wasn't completely clear (which articles tend to be), that the hedge loss reflects the loss of all hedges going forward at current prices. So some will be cash (for this quarters hedge) and the bulk non-cash (turning to cash in future quarters).
Well bears ... I got the feeling from your post that you were saying DAL paid $2/gal to hedge in the December quarter ... your quote, "It cost DAL about $2/gallon to hedge the past quarter". I was just saying in my post that the mark to market portion should be spread out to other quarters since the hedges were for future quarters. As the article (and the IR site) explained ... guess you didn't glean that from your reading.
Thought I was just adding some clarification ... no need to come back with a snide remark.
Using midpoint PRASM and midpoint cost guidance, Q1 eps should be (and using only numbers that AAL put out) ... $2.36
The range using worst to best, PRASM and costs, is about +/- 27cents.
Think you did it right, unc. Can't remember AAL ever using anything other than YOY numbers. Otherwise you get seasonal noise quarter over quarter.
Carruthers ... you missed my point. I think there are investors that want in ... why not wait until those that just used airlines as an oil hedge to slow their selling ... buy after the hedge sellers take the price down.
It's starting to look like a lot of the airlines are going to take a breather. AAL was first, and others look as if they are starting to roll over for whatever reason. I don't know if the 20 dma area will be it, or another trip to the 50 dma area. Just have to see where the industry pullback takes us.
At the end of October, AAL had probably contracted most of their November fuel. So I would only figure one month (December). Not saying you're wrong, just optimistic.
This is a small point (and I never looked closely at it), but I bet spot fuel is only 90% of the fuel costs with in to plane cost not changing being fixed. I use that by taking .9 times the change in spot fuel for the savings (when I run numbers through my mind).
All this is transition ... obviously at this point 2015 looks huge.
// sure would like to hear some guidance for 2015 //
cav ... AAL could very well update their cost guidance for Q4 with the December numbers (with the usual separate filing), and given the format of the usual release, that would also update cost guidance through 2015 (incl fuel). I'm sure the numbers have change enough to deserve an update, but they could also wait until earnings to do it. Or, maybe they'll just stick an extra sentence in the monthly release mentioning fuel costs.
In watching the Cramer video, I got the feeling Cramer was saying AAL was cheap for a good company, but its trading was just being controlled by the oil/airline programs ... and that being the case, things were treacherous ... you either had to respect the programs and trade, or live through it.
I'm sure the programs were written without consideration to the changing outlook for the airlines over the last six months. Maybe they'll bring the algo/programs up to date at some point.
Your question about operating margins is allowing me to ask about something I've been wondering about. When they put out a pre-tax margin is AAL including the merger expenses in their number to compute that?
Yes, that looks good to me. divide the $12 by 75%, which is what I thought you were going to do. Each share of AAL had a cost basis of $16 in your case.
// 75% of Cost Synergies Baked in //
That 75% was only related to a small area of synergies. Didn't include forecasted revenue synergies still expected. (Most synergies were on the revenue side anyway)
// i believe there will be plenty of useful info on it, //
markus ... it's not like they are going to give January prasm ... they don't give monthly prasm anymore. Their projection for the quarter was made a little over a week ago, so unless something changed in the quarterly outlook it shouldn't change. AAL unlike other carriers don't report monthly prasm yoy changes, just adjusting what they think the quarter yoy change will be.
The Feb report is important since they will have two complete months and a good feeling on bookings for March.
maximus ... I'm going to do some rounding here, but right now AAL's reported jet fuel for Q4 is 18% lower than when oil was at $105/bbl. So, as of right now they aren't realizing the full impact of lower oil ... but in 2015 the full impact should start showing up. Anyway, 18% of $105 oil is $80-85 oil ... and that is what their current profits are based on. If oil would go up $10-20, I would expect profits to be higher at $55-65 oil.
For the full year, 2014, AAL has probably only had the benefit of a 5% oil drop. You can see what is coming.