Whats "UP" with AMR stock ?

[NewHampshire Black Bears]

(Said Cuba Gooding Jr. in Jerry Maguire)

........."Show me the MONEY" !!!!!......

So I ask you, "Whats "UP" with AMR stock" ???

With $20 a Very Real Close reality, Wall street is starting to make a BELIEVER out of me.
($hit, I wish I had'nt dumped 2/3 of it already) !!

So "where do we(IT) go from here"


?????
NH/BB's

 

[FWAAA]

What's up with it?

Other than CO and LCC, it is the only remaining legacy stock that won't soon be canceled. As such, it is one of the rare airline stocks where investors (or gamblers, depending on one's viewpoint) can participate in the much lower price of oil.

The lower price of gas helps all airlines, of course, but doesn't have the prospect of making WN stock any more valuable due to its fuel hedges, which have largely insulated it from the downside of high fuel prices. It doesn't make UALAQ or NWAAQ or DALAQ worth any more, since those stocks are gonna be caneled during their bankruptcy proceedings no matter how much lower fuel goes. The stock of those airlines has to be canceled if they don't pay all their unsecured debts (and they won't be paying those).

Analysts are falling over each other in their latest predictions of returning profits at AMR.

On top of that, investors (again, gamblers) may finally be noticing that AA's mainline yield was up 8% in the third quarter year over year and that RASM was up over 12.5% year over year. In the third quarter, AA was finally able to charge significantly higher air fares.

All of that is very good news for AMR stockholders. Gonna be another nice Christmas at the FWAAA houselhold.

If profits do return at AA, and fuel continues to moderate, the AMR stock price could easily hit $30 - $40 within a few months. For those of us whose adjusted basis is under $2/sh, it may soon be time to cash out.

 

[eolesen]

Hey, I've been saying $20 by the end of the year for a while (actually, I expected it by the end of 3Q, but Katrina and Rita got in the way).

Bears, didn't I warn you and the others to hold onto it for a while longer?...

 

[LGA Fleet Service]

Sell it now.

Arpey and his with obsession Love Field is going to cost this company tens of millions per quarter in red ink, and that is going to crater the stock price.

Gee, suddenly Arpey is concerned about MCI and STL? Please. :blink:
STL has been treated like "A red headed step child" to borrow a line from another poster.Why NOW is it all of a sudden a lynch pin?

He could have run hourly service out of DFW to both of those cities (Among others)with the 717 had we kept that airframe.

(Yeah, I am going to keep beating the bones of that horse.)

No Eagle to feed the service at DAL either, good luck with that.

Don't come looking to me for another paycut to offset the losses this DAL misadventure will generate...

 

[Hopeful]

Should the Wright Ammendment be repealed, what do you think will happen to AMR stock?

 

[Ch. 12]

Should the Wright Ammendment be repealed, what do you think will happen to AMR stock?

To answer that, you'd have to ask "what, exactly, would AA do if the WA is repealed?"

If AMR follows through (as they probably will since they would admit "defeat" if they didn't expand greatly out of DAL) and picks apart their fortress to compete at a not-even-cross-town airport, they will potentially become vulnerable at DFW as well as create an expensive operational mess. THAT would take stock down, of course. AA is used to defending DAL against smaller players and they have long enjoyed non-confrontation with WN but with the repeal of the WA, that may all change. HOWEVER...as AA constantly states that DAL is really the same market at DFW and not a separate one, I have to agree with the analysts that it is really foolish to separate ops to compete within the same market. Just as WN doesn't split between DAL/DFW, MDW/ORD, FLL/MIA, it just wouldn't be a wise financial decision for AMR to split. If they carry through, investors will be less supportive than $20/share.

But then again...AMR is finally emerging from the depths of recession and TWA-aqcuisition and they are in a stronger financial position than most. If fuel spikes again next year, WN will be no better off than AMR. Will stock rise much more? I don't know. As an airline stock goes...I tend to think that if AMR stock rises much more, it is definitely a bubble and I don't know as though I'd be willing to purchase something that could burst at any time. And as always...airline investors are the craziest group of people I know. Willing to throw a buck at anything that says "airline" on it. They don't behave like a normal investor.

 

[eolesen]

Serious investors don't give a rat's a$$ about the Wright Amendment, nor do they react based`on emotion or public opinion. All they look at is AMR's overall revenue and cost advantages compared to the competition, and their relative financial health.

AMR already "splits" their ops at MIA/FLL, ORD/MDW, LAX/LGB/ONT/BUR, and JFK/EWR/LGA/HPN, so a sustainable operation at DAL really isn't all that unimaginable, especially considering the number of high value FF's who live in the immediate 5 mile radius of DAL.

And, even if AMR "lost" $200M at DAL, that's still than less than 1% of their annual revenue, and not worth getting too excited about.

 

[FWAAA]

And, even if AMR "lost" $200M at DAL, that's still than less than 1% of their annual revenue, and not worth getting too excited about.

Exactly. Not too long ago, we were discussing a possible $200 million+ in added annual revenue from the single ORD-PVG flight to begin next spring. Add to that AA's recent increases in unit revenue, and some "voluntary" losses due to moving some flights to DAL to save face won't change the serious investors' analysis.

 

[Ch. 12]

Serious investors don't give a rat's a$$ about the Wright Amendment, nor do they react based`on emotion or public opinion. All they look at is AMR's overall revenue and cost advantages compared to the competition, and their relative financial health.

AMR already "splits" their ops at MIA/FLL, ORD/MDW, LAX/LGB/ONT/BUR, and JFK/EWR/LGA/HPN, so a sustainable operation at DAL really isn't all that unimaginable, especially considering the number of high value FF's who live in the immediate 5 mile radius of DAL.

And, even if AMR "lost" $200M at DAL, that's still than less than 1% of their annual revenue, and not worth getting too excited about.

A wise investor cares about anything that can affect the bottom line. Per my previous post...I don't know if I'd call airline investors "wise".

If AMR "lost" $200M in revenue, that would put them near a billion dollar loss per year once again (as they recently reported a $153M net loss on $4.4B in revenue). If we only looked at revenue...sure...you're right. But a wise investor (even unwise ones) usually at least looks at profits.

And all that I'm saying about split ops is that it is a very costly, convoluted operational nightmare. Especially when the airports are NOT on opposite sides of s city. Your examples list airports that are more separate in their bases/locations than are DFW/DAL. I wouldn't consider the LA airports split ops as those are all very different markets. Same with NYC for that matter. But again...all I was saying is that split ops are not desireable...same as what Carty has said. But AMR has talked themselves into a huge split op if the WA is repealled and it would make them lose credibility to not split ops significantly and to not take service down at smaller airports. If AA splits ops in a conservative, low-financial-impact way, then they could be called liars for their claims on how horribly the repeal would affect them. So a wise investor...based on the knowledge of AMR's statements...would not be as inclined to buy if the WA was repealled.

But repealling the WA will only happen in a fantasy world for the time being.

 

[TWU informer]

And, even if AMR "lost" $200M at DAL, that's still than less than 1% of their annual revenue, and not worth getting too excited about.

But Dennis Burchette and Carmine Romano in Tulsa claim a goal of $500 Million for the Tulsa Base, which using your math, would only equal 2.5% of their annual revenue.

But the propaganda machine in the media runs full tilt on this idea and you would think the entire company future rides on success or failure of the pajama party company union adventure between the two smoke and mirror champions.

I don't disagree with your calculations or opinions here, I am just tired of having the smoke blown up my ass using the media.

Is there a document that shows that $500 million would only 2.5% of total revenue? I would like have a copy if that is available.

 

[WorldTraveler]

Airline stocks are never more than trading stocks - with the exception of LUV which has consistently generated acceptable returns.

WA won't get dumped all at once; it will be slowly chipped away; AA will manage to find new revenue w/ each new state that is added to the service list from DAL. However, keeping WA intact would allow AA/AMR to generate far more revenue. DFW still has one of the lowest percentages of LCC flights of any major airport and remains vulnerable; AA will fight to preserve the status quo but ultimately DFW will see plenty of low fare service - even if it's from AA itself.

 

[eolesen]

Revenue runs about $20B annually. You can do the math from there.

Ch.12, you really must not know much about AMR if you're quoting Carty over the Wright Amendment, so forgive me if I blow off your insight on what "serious investors" think about the stock or the company....

 

[Ch. 12]

Revenue runs about $20B annually. You can do the math from there.

Ch.12, you really must not know much about AMR if you're quoting Carty over the Wright Amendment, so forgive me if I blow off your insight on what "serious investors" think about the stock or the company....

Using actual numbers, revenue was 18.6B in 2004 so yes...I'll go with 20B for 2005. That said...as an investor...you look at profit. Didn't I just say that? Revenue does not even matter if you are losing 1B in profit each year. With current assets (as of Sept 30) being only 70% of current liabilities, I'd say that the balance sheet doesn't look perfect, either. Of course to keep this in context...I'm speaking from an investors' eye and I would think that seeing these figures and knowing that AMR suggests that repealling the WA would make them lose an additional $200M+ per year...I would not invest if the WA was lifted. That's all I'm saying...just speaking from an investor's point of view. Do I think the WA will be repealled anytime soon? NO. Do I think that AMR is better positioned than most legacies? YES. But would I buy AMR stock upon the fictional repeal of the WA at the currently inflated prices? NO. Maybe if the stock was half of what it is now but airline stocks are not going up to $50 anytime soon so I think $20 is a little on the high end of the curve.

 

[formeraa]

To answer that, you'd have to ask "what, exactly, would AA do if the WA is repealed?"

If AMR follows through (as they probably will since they would admit "defeat" if they didn't expand greatly out of DAL) and picks apart their fortress to compete at a not-even-cross-town airport, they will potentially become vulnerable at DFW as well as create an expensive operational mess. THAT would take stock down, of course. AA is used to defending DAL against smaller players and they have long enjoyed non-confrontation with WN but with the repeal of the WA, that may all change. HOWEVER...as AA constantly states that DAL is really the same market at DFW and not a separate one, I have to agree with the analysts that it is really foolish to separate ops to compete within the same market. Just as WN doesn't split between DAL/DFW, MDW/ORD, FLL/MIA, it just wouldn't be a wise financial decision for AMR to split. If they carry through, investors will be less supportive than $20/share.

But then again...AMR is finally emerging from the depths of recession and TWA-aqcuisition and they are in a stronger financial position than most. If fuel spikes again next year, WN will be no better off than AMR. Will stock rise much more? I don't know. As an airline stock goes...I tend to think that if AMR stock rises much more, it is definitely a bubble and I don't know as though I'd be willing to purchase something that could burst at any time. And as always...airline investors are the craziest group of people I know. Willing to throw a buck at anything that says "airline" on it. They don't behave like a normal investor.

Fortunately, AA will try DAL for a while and, if it's not successful, they will pull out. While they will spend some money on DAL, it certainly won't be a lot.

Ironically, 10 years ago, WN wanted the Wright Amendment to "protect" them from the likes of AA! How times change!!

 

[Ch. 12]

Fortunately, AA will try DAL for a while and, if it's not successful, they will pull out. While they will spend some money on DAL, it certainly won't be a lot.

Ironically, 10 years ago, WN wanted the Wright Amendment to "protect" them from the likes of AA! How times change!!

I agree with you 100% with the statement about AA at DAL. As has been mentioned on these boards recently, though, given all of the PR that AMR has put out regarding the drastic effects a repeal would have on AMR's routes (i.e. splitting their largest hub and removing service from small-mid sized markets), they do have to at least go through the motions and lose some money for a little while to save face. Otherwise it would look like they were cooking up stories to prevent the repeal.

As far as WN's stance...all I can say is 10 years ago they had much more open territory to expand into. In the last decade, they have conquered BWI, FLA (well...the whole east coast) and recent moves into PHL and DEN show that they really have few places left to expand. 10 years ago...there wasn't a need for WN to expand in Dallas and it wasn't a fight worth fighting. Now it is one of only a few options. WN is akin to a retail chain...they must keep expanding to keep generating their positive returns. Their expansion is the main thing that has helped them elude labor tensions since they never have a bloated workforce. If they improve efficiency, they simply higher fewer personnel than they normally would need for expansion and they don't suffer from bloating like the receding legacies do. But I digress...