Forbes Article on Trainer

[topDawg]

Thanks to everyone for doing the math - it's clear this has been a cash drain - so when you hear about trapped cash - please point back to the money pit this has been - DL has spent almost what AA has in trapped cash
 
As we all know someone struggles with math - the accumulated negative outlay is ~$500 MM

Trainer isn't my issue with Delta. I agree with the idea. 
 
 
this is the second time post merger Delta has taken a bath on hedges. It is starting to get old and in a hurry....... 

 

[WorldTraveler]

DL's 10K was filed with the SEC today and it details DL's hedge gains and losses.

there were hedge gains as well.

given that crude oil prices are moving around quite a bit, it is hard to know how large the hedge losses will actually be.

It is also likely that fuel will go back up and DL will have hedge gains as well.

hard to know how it will all play out and DL will lose some on hedges but the story is not finished.

 

[jcw]

So what you are saying is if another airline has a loss one place and a profit another place you will support that and be supportive of the other airline.  See if it's OK for DL to lose money in one place and make money in another place for long term gain - it's OK
 
We expect the same treatment of every other analysis by you.  For example, DL lost its shirt for 10 years in NYC - per DL management - not you - and now they are making money - we all say great for DL  - once again if an airlines strategy to grow a market, route, etc - they should get the same treatment you gave DL - you were not on here trashing DL for a decade on their losses in NYC so wlll you use the same logic with everyone else or will you keep the double standard - it's a simple yes or no question

 

[FrugalFlyerv2.0]

hard to know how it will all play out and DL will lose some on hedges but the story is not finished.

 
So when DL loses approx. $1.5 billion (or more) on bad hedges, World Fruadster brushes it off as no big deal.
But when a competitor has approx. $500-$700 million "trapped" in a certain Latin American country (a dollar amount that is much less than half of the DL fuel hedge loss) it is doom and gloom.
 
Nah, World Fraudster doesn't have any narratives or double standards, it's all about grasping the whole truth ... ... ...

 

[WorldTraveler]

no, nothing has been brushed off as no big deal. unlike you, I can and will look at the facts and not jump to some conclusions because I am jealous that some other airline is getting good press and making right decisions.

and if you and others would bother to look at the hedge gains of the past, the total today is not $1.5 billion even if every hedge that DL currently holds is bad and DL ends up losing on them.

and since those hedges are not settled, any rise in fuel prices will likely decrease the amount of the losses.

further, unlike you, I look at the whole picture. As I have noted multiple times before, fuel hedge losses at DL are offset by stronger revenue. DL's hedge losses even at their most recently announced value amount to several percent of DL's annual revenue. DL is generating revenue growth far in excess of the hedge losses. Other carriers are not.

finally, you want to pick on fuel hedge losses but want to ignore currency losses and impaired currency. DL said that as of Dec 31, 2014 it had $102 million in currency tied up in Venezuela. Compare that to over $650 M for AA. Add in that DL still has effective currency hedges in place for the Canadian dollar and the Japanese yen and DL is saving tens of millions of dollars in currency losses that AA will have to eat.

and we haven't even come close to talking about the overall change in AA's revenue performance, much of which is driven by the higher dollar and its effect on Latin economies, AA's largest global region.

and DL never said that NYC was not profitable so there was no way to know that it wasn't. but DL is profitable in NYC and its profits will continue to grow. In contrast, if AA was profitable in NYC, they wouldn't have pulled out of as many markets as they did.

so, when all is said and done, the advantage that AA has in hedge gains will likely not at all be enough to offset AA's currency losses and revenue shortfall compared to DL or UA.

but since an article mentioned fuel strategy because that was a big number and the media didn't bother to look at the full facts even before the article was written, you seem to think it is ok to run with that article even though AA's revenue shortfall and underperformance is far larger and its currency issues amount to a very large chunk of DL's fuel hedge losses, even if the price of jet fuel doesn't move up - but it is.

 

[topDawg]

 
So when DL loses approx. $1.5 billion (or more) on bad hedges, World Fruadster brushes it off as no big deal.
But when a competitor has approx. $500-$700 million "trapped" in a certain Latin American country (a dollar amount that is much less than half of the DL fuel hedge loss) it is doom and gloom.
 
Nah, World Fraudster doesn't have any narratives or double standards, it's all about grasping the whole truth ... ... ...

As I have told you guys before. 
 
WT would find a way to tell us how great it is if Delta were to grind up our kids and puppies and make jet fuel from them. How we should be happy to give our kids to them because its for the good of the company. 
 
AA or any other airline could come up with the same idea(after Delta did it) and WT would tell us how terrible it is. 
 
Delta wins 
American loses 
simple as that. 

 

[WorldTraveler]

except that AA or anyone else did not choose to invest in a refinery. DL did.

Parker says that the market serves as a natural hedge against fuel prices.

problem with his thinking is that fuel is priced in dollars and the strong dollar is hurting developing economies the most.

It is precisely because of the weak dollar that AA is seeing yield declines as large as they are in Latin America.

Further, AA has $650M in currency tied up in Venezuela.

Combined AA's revenue losses in Latin America and its currency losses amount to far more than DL's fuel hedge losses.

and DL also has hedges on the Japanese Yen - which has been the currency decline that has had the biggest potential to hurt DL.

Trainer IS profitable. DL's losses have been related to fuel hedging. DL says they will continue to hedge.

You can't hedge revenue declines... which is too bad for AA.

 

[jcw]

It's funny this thread is about a cash flow negative refinery and some how talking about currency markets like no other airline has currency challenges

 

[WorldTraveler]

Only because you and analassts only focus on one cost item to the exclusion of others and revenue too
It's all about balance...an unknown concept to you

 

[jcw]

Wait so when you fixate on one currency AA has an issue with how is that different - your double standards never cease to amaze

 

[topDawg]

AA sucks
Go Delta

FIFY 

 

[WorldTraveler]

I have repeatedly cited AA's currency issues and revenue shortfalls alongside its revenue gains from eliminating US' pricing policies
Others can't do the same regarding the refinery and DL's revenue performance

That is precisely why I get highlighting the issue

Let us know the expected profit margin for AA and DL but i believe they are pretty close which says AA's lack of fuel hedge losses is being offset by revenue weakness because the impaired currency hasn't even been dealt with

 

[jcw]

Since you repeatedly pound AA on currency then others can pound on DL - it's called equal treatment

 

[FrugalFlyerv2.0]

Let us know the expected profit margin for AA and DL  ..................

 
My prediction is AA > DL  (partly based on no refinery losses for one of the carriers)
 

 

[WorldTraveler]

You can't understand that 5% difference in revenue is far more than DL's hedge losses

Far more

And AA's currency losses are half of DL's hedge losses

In total with AA's increase in costs, the difference is likely not what you think