If the longer dated drop in futures is indicative of the world oil prices, it is positive.
But I have mixed feelings. I'd almost want industry management to have to "manage" to get their margins regardless of oil. The risk to lower oil is that industry management will achieve margins by having an externally controlled cost drop ... i.e. oil ... and become lax managing what they can control.
However, the other benefit to lower oil is to the overall economy. Growth? anyone? ... that is good for airlines.
I should have said something about what AAMRQ got if the cap was exceeded ... based on Uncles explanation of the .16 and .175 it might have cleared up the .16 figure. As the max cap is exceeded, AAMRQ is still figured the same, but the "smaller" amount of shares that the preferred saves by being held at the cap is subtracted from the AAMRQ shares ... but AAMRQ will still have added shares even after the subtraction.
And always a qualifier ... max shares can't be exceeded.
Prof ..." Every single stock in the market is worth the current price, we just don't like to believe it. "
Every single stock is selling for the current price.
We can discuss "mark to market" accounting ... it certainly had its part in screwing things up in 2008 ... put into effect for Q1 2008 reporting, and removed a week before the market bottom 5 years ago today. It killed banks forcing them to report loses that weren't there the quarter before, froze money, and those loses and the financial freeze created "fear" ... the necessary ingredient for layoffs ... 70% of the people losing their job, go through foreclosure. Five people on the FAS board.
Oil products are priced off the world oil price. WTI is artificially low ... just a bigger premium for refiners. WTI fluctuating just changes the refiners' margins. I don't know anything about what program traders use.
But pick what you want. Since oil is relatively stable and airlines have been adjusting fares to cover changes for the last few years, I don't think it is a big deal ... except airlines have to make those adjustments.
"Interesting estimates since last quarter LCC earned $1.04 and AAMRQ earned $1.35."
LCC's Q3 earnings was after-tax eps and AAMRQ was pre-tax eps. They will probably report Q4 for LCC and AAMRQ on the same basis, and then give a combined earnings as well from Dec 9th to eoy for AAL ... I assume that may be pre-tax, but who knows what share count they'll use ... probably the max share count to give a first "look".
I generally agree with you that a lot of good people got the raw end of the misdeeds of "old thinking" airline managements. Some managements were good but had to deal with those that didn't get it (what you said). It weakened the industry until 2008 broke its back.
That said Anderson didn't take NWA into BK ... he was out of the industry for awhile. But I will add, that in early 2009 (if not late 2008) it was Parker that went first with capacity, and stated all have to do this in order to get fares up. DAL (with Anderson) and also CAL were still increasing ASMs going into late 2009, and in early 2010 they got religion. Anderson is good and gets the attention, but Parker is the man ... the "little" industry leader who isn't so little anymore.
Right now AAL eps estimate for 2014 is about 35-40% higher than DAL. If that holds, AAL will be proportionally awarded. The legacies are essentially the same animals ... just adjust for the number of shares. UAL will adjust as well (at some point).
A factor in jet fuel, not allowing it to move with Brent as you'd think, was probably the cancellations. Unlike heating oil, it doesn't care about temperatures, but does care about the number of flights. And the supply chain doesn't predict storms very well.
Then again Brent hasn't varied that much ... so far.
The "gouge formula" was first put out last Jan/Feb by JP Morgan. And adjusted as new info came out. The adjusted one is very close and sounds like the one you have. The actual formulas in the BK docs make up the charts. All can be used ... no biggy.
The formula would actually uses a higher than cap price for the VWAP, but then subtract out the shares in excess of the cap. So we get to the same place. But when you said the cap was the highest price use for VWAP, and if one was using the formula, it would lead to "less" shares than I was expecting. So I asked ... you were using the charts ... fine ... I understand and we agree.
apkagk ... except if there was a change in disputed claims (which I haven't heard of), why wouldn't the value hurdle price not be the same as in the first distribution? So, absent a change in disputed claims the value hurdle price is a "constant" for the next distribution.
That leaves the VWAP as the only variable for the second distribution ... absent going above the cap.
Smartphones are so common place now, the market for them is like the old feature phone market. And tablets are essentially an extensions of laptops and desktops ... get a tablet and an attachable keyboard ... opps... not so good with an ARMH chip ... opps ... need a touch os for laptops and desktops.
AAPL needed to break $570 and it didn't ... it needs to turn around in a hurry or it's in trouble.
The comment period for establishing position limits on commodities ended Feb. 10th. It also includes the requirement to aggregate positions in out months in considering the limits. I don't know when the rule will be considered to be made final and then at least a normal (usually 60 days) effective date. It's gotten to the final rule stage before and even with an effective date. Commodities always seemed to drop approaching the effective date. Last time right before the effective date, the "large traders" sued and the courts vacated the rule. Commodities then started back up. There is a lot of confusion surrounding what commodities will do this year. Anyway, on 10 Feb. this came out in the Financial Times.
"Giant commodities traders to lobby against CFTC over ‘position limits’
The Commodity Futures Trading Commission should “reconsider and revise” its proposed “position limits” rule seeking to curb speculation in trading of all futures and swaps linked to a basket of 28 commodities, a lobby group representing some of the world’s leading commodities traders will say on Monday.
In formal comments to the agency’s rule, the Commodity Markets Council, which counts Archer Daniels Midland, BP, Cargill and Louis Dreyfus Commodities among its members, will argue that the measure would lead to a “wholesale redesign” of the existing regime and thus adversely impact the daily market for purchasing and delivering shipments of grain, oil and metals."
I agree. When they indicated on the CC that there were "hundreds" of places they'll probably get more synergies (and some more than they expected), it was a gift.
Just a tidbit from the past, Parker said that AMR would be accretive to LCC's 2013 earnings in 2014. At the time LCC's estimates were running around $3/share, and that was after tax. So, accretive to $4.50 pre-tax in 2014? Current estimates are at $3.70.
Cav ... have to agree with you. I can build a list of macro (negative) events, but right now they seem low probability (though lurking), but still the higher probability macro situation is "bright", which is "icing" on the industry cake.
"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.