The end of Wright

[RJcasualty]

Maybe you should take your sobering AAL finance lesson to Wall Street--- but then again, maybe not. Keep pounding the table, Cramer!!  ;-) 

 

[WorldTraveler]

Wall Street usually has few people that understand the weeds of any industry and that is even more sobering given how much information the airline industry makes public. They are good at looking at the big picture and listening to the presentations but they don't understand what makes the industry work. Thus, there is a place for people who understand what really takes place in the industry and can see the trend lines.

AA knew that Wright was coming but they couldn't have predicted the convergence of events that would be occurring all at the same time that Wright would fall, most of which have the potential to specifically negatively affect AA.

If it turns out I am wrong, I will be happy to admit it... but there are far too many people here who discount the sheer volume of changes that AA must navigate in the near future, changes that are far larger and more numerous than any other airline has uniquely faced at the same time.

 

[Glenn Quagmire]

Maybe you should take your sobering AAL finance lesson to Wall Street--- but then again, maybe not. Keep pounding the table, Cramer!!  ;-)

FWAAA has some of the most accurate posts and statements about legal and financial matters on this forum.

You would do well to pay attention.

 

[xUT]

FWAAA has some of the most accurate posts and statements about legal and financial matters on this forum.

You would do well to pay attention.

Not to mention he can manage it in under a thousand words...

 

[WorldTraveler]

FWAAA addressed the financial situation at AA. He hasn't ever acknowledged so far as I recall that AA has enormous combined strategic challenges facing it that exceed anything any other airline has faced at one time, esp. since other airlines aren't facing even one of those challenges to the same degree that AA is.

We will know in a few months what WN is going to charge for introductory fares when Wright falls (or is amended) but given that it is in an off-peak season, there is every reason to believe that WN will cut fares deeply and keep them that way for months in order to establish itself in the market.

It doesn't take a great deal of knowledge of the airline industry to know what that kind of fare cutting has done to airline profits on a large scale.

 

[traderjake]

Wall Street usually has few people that understand the weeds of any industry and that is even more sobering given how much information the airline industry makes public.

 
WT is right.
 
AA might as well close it's doors and file CH 7 now.
 
American and United will never be able to remain viable with Delta around.

 

[WorldTraveler]

you sure?

we would have to shut the board down too.

 

[RJcasualty]

DP has been spreading pixie dust all over the proceedings. Motley Fool reports AAL share buy-back program to steady the boat--- which is news to me:  "...Apparently, American Airlines Group itself agrees with analysts and the undervaluation sentiment as the airline bought back approximately 14 million shares since the merger. This move not only helps to balance out selling by former AMR creditors, but also reduces the shares outstanding..."

 

[Glenn Quagmire]

you sure?we would have to shut the board down too.

There is a bright side to that happening WT.

You will finally have time and an open place to post your long awaited "Unidelta Manifesto".

 

[WorldTraveler]

what I or anyone else posts won't change what actually happens in the airline industry.

We can either pretend that nothing really matters off of the board that affects the lives of those who participate in this forum or we can all acknowledge that the industry is highly competitive and honestly and openly discuss it.

AA and US engaged in the merger with the goal of gaining certain competitive advantages. That was said over and over during the merger announcement and in the months that followed. It was fully expected that other airlines would engage in their own strategic initiatives that would maintain the advantages they had and/or minimize the advantage that AA/US gained.

AA/US has a window in which they can act to take advantage of the merger.... but it doesn't change that they are facing significant strategic challenges that one by one are some of those significant any US airline has faced. The combination of them is beyond precedent in the US airline industry.

 

[FWAAA]

DP has been spreading pixie dust all over the proceedings. Motley Fool reports AAL share buy-back program to steady the boat--- which is news to me:  "...Apparently, American Airlines Group itself agrees with analysts and the undervaluation sentiment as the airline bought back approximately 14 million shares since the merger. This move not only helps to balance out selling by former AMR creditors, but also reduces the shares outstanding..."

Here's Parker's spin on that from the earnings release:
 

During the fourth quarter, the company elected to pay approximately $300 million in tax withholdings for employees under the Plan of Reorganization in lieu of issuing shares of common stock, thereby reducing the number of shares issued under the Plan by approximately 13 million. On Jan. 9, 2014, the first distribution date, the company paid approximately $23 million in additional employee tax withholdings in lieu of issuing approximately 1 million shares of common stock. The company may make a similar election on future distribution dates as both a service to our team members and an indication of our confidence in the value of our common stock.

 
http://hub.aa.com/en/nr/pressrelease/american-airlines-group-reports-fourth-quarter-and-full-year-2013-financial-results
 
"Service to our team members..."    Wow.   Of course, by not issuing those shares, Parker's share of the future profits are concentrated and  magnified, since his huge share holdings aren't diluted.   Not unlike Buffett's philosophy of always buying companies for cash if they'll accept cash - that way you don't share the future earnings since they were paid cash.