"Delta remains king of the jungle"

[WorldTraveler]

... Helane Becker of


"The king of the jungle continues to roar," wrote Cowen & Co. analyst Helane Becker, in a report issued Friday.

At its presentation, Delta unveiled its 2015 expectations. It expects 2015 pretax profit to increase by 11% to at least $5 billion. It expects to save $1.7 billion on fuel price declines, even after $1.2 billion in hedging losses. It expects to complete a $2 billion share-buyback program. It expects to realize $250 million in new revenue from offering four fare categories.


Becker said the presentation confirmed that fares are unlikely to decline because of lower fuel costs. "We believe steady fares in a low jet fuel environment will drive meaningful margin expansion," she wrote. She increased her price target to $58 from $45.


http://www.thestreet.com/story/12983798/1/delta-up-78-this-year-remains-king-of-the-jungle-analyst-says.html

 

[topDawg]

... Helane Becker of


"The king of the jungle continues to roar," wrote Cowen & Co. analyst Helane Becker, in a report issued Friday.

At its presentation, Delta unveiled its 2015 expectations. It expects 2015 pretax profit to increase by 11% to at least $5 billion. It expects to save $1.7 billion on fuel price declines, even after $1.2 billion in hedging losses. It expects to complete a $2 billion share-buyback program. It expects to realize $250 million in new revenue from offering four fare categories.


Becker said the presentation confirmed that fares are unlikely to decline because of lower fuel costs. "We believe steady fares in a low jet fuel environment will drive meaningful margin expansion," she wrote. She increased her price target to $58 from $45.


http://www.thestreet.com/story/12983798/1/delta-up-78-this-year-remains-king-of-the-jungle-analyst-says.html

So in other words Delta would have saved 2.9 Billion on fuel if it wasn't for the hedges? 
 
Or Delta is going to only save 500M on the fuel drop? 
 
 
If its the first one, jeeeeesh thats a hell of a drop in fuel prices

 

[FWAAA]

So in other words Delta would have saved 2.9 Billion on fuel if it wasn't for the hedges? 
 
Or Delta is going to only save 500M on the fuel drop? 
 
 If its the first one, jeeeeesh thats a hell of a drop in fuel prices

Yep, DL expected to save almost $3 billion on fuel in 2015, but the hedging losses will halve that amount.

For most of the past couple of years, fuel has fluctuated around $3/gal but the spot prices for fuel dropped on Monday to just under $2/gal. DL buys about 4 bilion gallons of jetA per year (mainline and all regionals) so the $3 billion of expected savings sounds about right.

AA buys about 4 billion gallons as well each year, and with no hedging losses, AA can expect an extra $3 billion to $4 billion in its pockets by the end of 2015 as long as fuel doesn't go back up. While that will reduce the fuel savings from buying so many new expensive planes, the $1.5 billion that AA won't lose in hedging losses will pay for quite a few new 737s. I'm usually a fan of hedging, but Parker got lucky with this current fuel price cycle. Had it spiked up another dollar or two instead of dropping a dollar, AA would be in a world of hurt.

 

[WorldTraveler]

yes, dawg, DL is pocketing part of the savings in fuel costs.

They said they will participate in 65% of the downside which means they are losing 35% of the value in hedges.

and no, FWAAA, AA will not pocket all of the difference that they did not hedge because AA's revenue performance is weaker than DL's and likely will continue to be because many of AA"s key markets are seeing revenue erosion.

Plus, AA has a revenue disadvantage to DL already.

and AA still has a $700 million Venezuela currency loss to deal with.

When all revenue and currency issues are added to the fuel hedge component, the chances are very high that AA's fuel gain will be offset and if revenue trends continue, AA could suffer a greater loss of revenue and to currency losses than DL will because of fuel hedge losses.

 

[jcw]

What does Latin america have to do with fuel hedging

Oh that's right change of subject

AA outmaneuvered DL

Sorry that hurts

We should have the moderators shut this thread down

 

[WorldTraveler]

the revenue environment absolutely matters despite the fact that you can't see that the BOTTOM LINE on any financial statement includes multiple items.

NO $40B company is made or broken by one item in one quarter.

AA might have won in this quarter regarding fuel hedges but would you like to tell us how much DL won for the past quarter after quarter because of its successful fuel strategy?

you and others can't seem to grasp the concept that any hedge has to consider wins and losses. DL has had a fuel cost advantage to the industry for many quarters.

further, what AA has done with currency is absolutely material.

You want to talk about fuel hedges. I want to talk about currency losses. DL and UA have currency hedges that have worked. AA doesn't have them.

 

[Kev3188]

DL has had a fuel cost advantage to the industry for many quarters.

...And WN had one before that...


...And so it goes...

 

[jcw]

So let's see you started this thread by saying how much DL was saving on fuel

When someone pointed out that AA will blow DL away in fuel savings you changed subject to Latin America

See we know when you are proven wrong you change subjects

Moderators please close this thread someone can't handle the facts

 

[WorldTraveler]

no, I started the thread based on industry analyst comments which were not at all restricted to fuel hedging.

reread the linked article before you start making up your own rules.

 

[southwind]

What does Latin america have to do with fuel hedging
Oh that's right change of subject
AA outmaneuvered DL
Sorry that hurts
We should have the moderators shut this thread down

Yeah and AA's management also said employees don't deserve profit sharing because they have nothing to do with making a profit!
Sounds to me like the union backed employees are being outmaneuvered!

 

[jcw]

That's out of context we havet o read the entire statement

 

[WorldTraveler]

saying that profit sharing isn't an appropriate way to pay frontline employees is all the context that is needed.

Parker opened his mouth and said one more stupid thing that will only serve to aggregate the bad labor relationships AA has long had


Factor in that whether he said it or not, AA employees are and will remain lower paid than DL employees even while DL still makes more money and has stronger financials and the only context you are looking for is one that makes all of that not true.

it is true.

AA employees make less and will. And DL will generate stronger financial performance.

If it weren't true then DL wouldn't continue to be the highest valued airline in the western world.