2016 results are in!

[WeAAsles]

My opinion why LUS stopped hedging is that in 2008 they simply didn't have the money and were contemplating another trip through the courts . Well the stars aligned just right and they looked brilliant. Back in the 90s our CEO Wolfe bought back like 300 million in shares, boy we could have used that money after 9/11. Probably could have used it before

"As of September 30, 2016, the Company had approximately $9.2 billion in total available liquidity, consisting of unrestricted cash and short-term investments of $6.8 billion and $2.4 billion in undrawn revolver capacity. The Company also had restricted cash of $635 million.

The Company returned $669 million to its stockholders in the third quarter through the payment of $53 million in quarterly dividends and the repurchase of $616 million of common stock, or 18.2 million shares, at an average price of $33.87 per share. The Company has returned more than $9.0 billion to stockholders through share repurchases and dividends since mid-2014."

 

[CremaDiLimone]

I agree with about 90% of what you said. I think I can understand their philosophy on not hedging fuel. There were a lot of people out there who thought it was going to drop even further and (so far) it hasn't. The $50 range seems to be the floating level that they can't break away from. OPEC tries to cut capacity and BAM those US wells start opening up and flooding the market again. Not to mention under the Trump administration the environment is going to be the casualty in that War. I think OPEC is finished?

I understand the philosophy of buying back shares but I just think enough was enough on that. Time to start paying down that debt even if it is low interest. I'd also like (of course) to see them contribute more to shoring up the underfunded Pensions again. I don't think they have to begin making those payments again till 2018 but it would be nice to see a few hundred Mil put in this year.

I think when Delta goes to revitalize they're going to have to pay a lot more for interest rates if they use credit? That AA order during the BK was brilliant long term. 30% less fuel burn on all those new birds will really help the bottom line just in case somehow there is an unexpected fuel spike.

While I don't agree with everything Parker and team have done looking back on their History up to today, I wouldn't have invested in US if I didn't have confidence in their abilities and been able to look at them outside the eyes of an employee (Which even though I may be slammed for this I like what they've been doing in that area pretty much too so far)

as far as hedging...for oil to have gotten down to $20/barrel or less, this would have signified a world-wide economic contraction, less revenue/income for aa that erases fuel savings from $30/barrel to $20/barrel or less.

it would have been bold to do at $30/barrel, wall street loves certainty and fuel would have been a set cost. since aa was recently out of BK, i'm not sure if hedging would have added x-amount of basis points to the rate.

one way or another, the fuel situation got little play in the media at BK time, as corporate america and it's news outlets, prefer to blame labor for corporate america's shortcomings. the same occurred with the automakers, congress (especially repubs) pointed fingers at the uaw, the CEOs (under oath) pointed the finger at skyrocketing medical costs and the whole matter was dropped as big pharma, for-profit hospitals and health insurance companies rule the roost in political circles.

we live in the greatest nation where american ingenuity has dismantled a seemingly omnipotent energy bloc that used oil as a political tool to some extent. our industry was slammed on 9-11, our economic futures put into jeopardy...this shale oil revolution is our savior.

as far as the rest, yes...one has to look at it from an investor's angle and from an employee's angle. the money spent on stock buybacks was incredible, tantamount to delta's spending on it's profit sharing program. parker was incredulous to the fact that aal got no love from wall street, while the employees where wondering where the company's love for us was at.

it's our turn now and we'll see if parker comes through.

In fairness to your crew I believe some managers were predicting something in the 5% range

i asked him again about this and it was clear he got confused about the 5% figure.

when aa said it would be 5% of the company's pre-tax profit, many of us knew immediately it would be meager, compared to everyone else. no real high expectations.

 

[swamt]

True that the puzzle, but only if paired with the lime green sofa bed, the orange fake leather recliner, and the wagon wheel coffee table. The rest of your money has to go to the down payment for the 72 inch flat-screen TV.

Let's not forget the tapestry of the dogs shooting pool hanging over the fireplace...

 

[CremaDiLimone]

I'd also like (of course) to see them contribute more to shoring up the underfunded Pensions again. I don't think they have to begin making those payments again till 2018 but it would be nice to see a few hundred Mil put in this year.

something has to give here..

2017 is supposed to be the peak of cap ex spending (taking delivery of 57 mainline aircraft and 12 regional aircraft this year at a cost of $4.1 billion) and downhill after...but, the airline pension relief act runs out in 2018.

CFO kerr said that right now, aa has $17 billion in pension obligations and assets are around $10 billion.

kerr said that aa will make a $300 million contribution in q2 of 2017. aa will then make a $1.1 billion contribution in 2018 and then make an $850 million contribution in 2019.

 

[CremaDiLimone]

I've learned to try and set my expectations and those I talk to low instead of giving them a possible false sugar high.

When people expect less and get more that usually makes them much happier.

you better prepare them for 2018's profit sharing.

the company says that q1 2017 is looking like 3%-5% pre-tax profit margin. based on revenues, q1 is usually the lowest. this is the guidance they gave.

if aa generates $9.5 billion in revenue for q1 2017, the company is looking at a pre-tax profit of $285 million - $475 million for the quarter.

top end, let's say $500 million. 5% of that is $25 million and we're on pace for a whopping $100 million for next year's profit sharing....1/3 less than this year's profit sharing and all the associated complaints.

unless this becomes contractual with more generous parameters, most would be better off forgetting about it.

 

[FWAAA]

Kerr's guidance of pre-tax first quarter margin of just 3% to 5% was a stunning revelation, considering that the pre-tax first quarter margin in 2016 was 12.9% and in 2015 it was 12.7%. If margins stay this low in 2017 and beyond, then contractual hourly pay looks more attractive than profit-sharing.

 

[WeAAsles]

you better prepare them for 2018's profit sharing.

the company says that q1 2017 is looking like 3%-5% pre-tax profit margin. based on revenues, q1 is usually the lowest. this is the guidance they gave.

if aa generates $9.5 billion in revenue for q1 2017, the company is looking at a pre-tax profit of $285 million - $475 million for the quarter.

top end, let's say $500 million. 5% of that is $25 million and we're on pace for a whopping $100 million for next year's profit sharing....1/3 less than this year's profit sharing and all the associated complaints.

unless this becomes contractual with more generous parameters, most would be better off forgetting about it.

I've tried many times to prepare them for items like this and try to give them some realistic expectations but you know very well some of the people we work with. They live in their own dreamlands where they actually think they should be compensated just as much as people who graduated from Wharton.

I hate to admit this but the future could look brighter in a few years if the Trump administration renegotiates fairer trade agreements and continues on a path to maybe full on energy independence? I'm hoping he can also find a way to fund that infrastructure spending and that would create more disposable income.

(But what do I know since supposedly from one poster on here I'm a Libtard)

 

[WeAAsles]

Kerr's guidance of pre-tax first quarter margin of just 3% to 5% was a stunning revelation, considering that the pre-tax first quarter margin in 2016 was 12.9% and in 2015 it was 12.7%. If margins stay this low in 2017 and beyond, then contractual hourly pay looks more attractive than profit-sharing.

From the employee perspective guaranteed hourly wages are or should always be a better option than at risk compensation like PS.

I'm not a gambler myself so I also prefer wages coming from the company I work for. And you don't get loans by saying what you think you might make off a one time yearly check.