AA to Pay 30 Cents Less Per Gal of Fuel Than DL/UA in 2015

[Kellerguy]

Both DL and UAL are expected to have to PAY more than $1.3 Billion more than AA for fuel in 2015 due to less wisely planned financial planning for fuel expenses, including costly,  unnecessary fuel hedges.  Fuel hedges have not paid off for years.
 
 
http://www.marketwatch.com/story/american-positioned-to-save-more-than-rival-airlines-on-jet-fuel-in-2015-2015-01-02?link=sfmw
 
 

 

[jimntx]

Now please, a financial article written by a woman?  Really?  And, the article states that AA did ANYTHING better or at less cost than Delta?  Sheer fantasy.

 

[iluvaa]

Wait for it......

 

[MetalMover]

Now please, a financial article written by a woman?  Really?  And, the article states that AA did ANYTHING better or at less cost than Delta?  Sheer fantasy.

But, but, but, Delta owns their own refinery! How is this possible?

 

[jcw]

We have to remember this was great on the way down - when fuel starts to rise it will have negative impact - what's more interesting is the notion that the stock price is trading 50% below value that would make AA larger from a market cap than other US airlines

 

[robbedagain]

on justplanenews.com with a link to philly.com  the article states that the company will also save bec of no ps for most employees      id say give us the raises every 2 weeks which is guaranteed  vs a ps bec if the company doesn't make dough then no ps  no matter what someone else claims

 

[WeAAsles]

Wait for it......

The psycho nut ball hasn't posted since Thursday? Has anyone checked the area hospitals yet? Try the psych wards.

 

[jimntx]

We have to remember this was great on the way down - when fuel starts to rise it will have negative impact - what's more interesting is the notion that the stock price is trading 50% below value that would make AA larger from a market cap than other US airlines

However, friends who are still in the oil bidness (unlike me.  I gave up the money for the glamor of the airline bidness) tell me that fuel prices are not going up anytime soon because at the moment the world is awash is crude oil thanks to the total production going on.

 

[jcw]

However, friends who are still in the oil bidness (unlike me.  I gave up the money for the glamor of the airline bidness) tell me that fuel prices are not going up anytime soon because at the moment the world is awash is crude oil thanks to the total production going on.

I agree it will stay down for a good while - all the US production is really reducing our dependence on importing oil - it will be a fairly long trend
 
Remember we are not responding to WT so no need to discuss what he posts

 

[jimntx]

I know, and I have had him on ignore for over a year.  However, it's like coming up on a bad car wreck on the freeway.  Sometimes you just have to slow down and look.  

 

[WeAAsles]

I know, and I have had him on ignore for over a year.  However, it's like coming up on a bad car wreck on the freeway.  Sometimes you just have to slow down and look.  

Great analogy. I have him on ignore as well but feel like I'm compelled to be dragged in like I'm standing in quicksand or something.

Anyway back on topic.

"We're seeing more of the same," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. "The Chinese and European PMI figures signal weaker demand, while there's ever-increasing supply. Nobody is cutting back on output and now the Russians are posting post-Soviet production highs."

http://finance.yahoo.com/news/oil-trades-5-1-2-125029248.html

 

[swamt]

I know, and I have had him on ignore for over a year.  However, it's like coming up on a bad car wreck on the freeway.  Sometimes you just have to slow down and look.  

You must be a typical DFW area driver always wanting to slow down and see "something" when driving on the opposite side of the highway.  Just poking fun Jim.  I came from up north and I have never seen it so bad.  Texans are the worse at doing this, as well as almost coming to a complete stop when a rain shower starts.  Sorry off topic.
I read one of the articles that did say part of AA's 2015 huge savings will be due to no PS.  In the same article it said Delta should save as much as .65 on the dollar, and now they are saying AA will save .30 on the dollar in comparo to Delta, this would be great.  I remember people slamming AA for not hedging fuel after coming out of BK (even while in BK) but It may turn out to be the best decision after all.  We will all find out later...

 

[Kev3188]

Post BK, DL has had a philosophy of making moves that balance out the peaks & valleys of the industry. They cite it for everything from the refinery to rationalizing our wages. It's quite good for managing expectations. W/r/t to fuel, it'll be interesting to see how this all shakes out, and whether or not the path they're on is the right one.

 

[WorldTraveler]

Well said, Kev. you have always been one of the most rational thought leaders on aviation chat forums.
WN hedged fuel and won in the 2000s but has had higher fuel costs since. DL
had fuel price advantages for many quarters but no one has compiled a true scorecard.

DL has a goal of having below average fuel costs for 2015 so I suspect they know more than we know here esp since no airline has provided fuel year fuel guidance.

 

[CMH_GSE]

At some point, if oil reaches the mid $40 per barrel arena, one has to wonder what would AA have to lose by then hedging when their business model is built on $100 per barrel oil.

If they buy significant hedges at $45 and it goes down to $35 or $25, so what, they're still poised to make Billions in profit at $45. But if it moves back up, they would then have a backstop for it, as WN did in the early 2000's.