Letter from Doug Parker
- Thread starter Fixed Wing
- Start date
BoeingBoy, I fully understand what each of the analysts said and what they wrote. Moreover, unless the reports are public knowledge I will not violate certain restrictions. If you elect to do so...go ahead.
700UW, can you tell me what Business Week referred to when they commented on "insider trading"? You're kidding about being right...nah...never mind. I know it's written in plain english and most people can understand that, then again...
By the way, in regard to anlayst reports today J.P. Morgan indicated:
March Mainline RASM +10.2%; Revenue +25% from February - J.P. Morgan Securities
· March mainline RASM +10.2% – Mainline system RASM rose 10.2% in March, consistent with our recently-strengthened 2006 outlook though of debatable immediate value against backdrop of earnings season. As hoped, March figures largely mirrored those of January, with domestic RASM rising 12.5%, roughly twice the international improvement of 6.2%.
· Carrier breakdown – March mainline revenue of $6.29 billion represents a 25% sequential improvement from February, nicely ahead of the 21% average and the second largest Mar-vs.-Feb improvement since at least 1995 - and the best ever for a March without Easter. Given this sequential revenue acceleration, it is becoming increasingly clear that RASM gains are not solely a function of capacity, with early-year fare increases likely to credit. We believe US Airways led the industry in mainline RASM improvement at 17%, followed by Northwest +12.5%, Delta +12%, United and Alaska +10%, American +8% and Continental +4%.
· Yields are just beginning to rise – On a rolling 12-month basis, domestic yields remain a stunning 17% below peak (pre-attack) levels, having bounced a mere 6% off all-time lows to levels roughly approximate with those of 2003/2004 (see chart in report). Accordingly, we see little if any risk of near-term passenger resistance to higher fares, all the more so given unleaded alternatives in shorter-haul markets.
· April RASM estimated +16% – Our preliminary, Easter-enhanced mainline RASM forecast for April is 16%, followed by 13% improvements in May and June. No change to full-year +9.5%, which we believe remains a Street high. We assume others may share our April view though underestimate the magnitude of May improvement…suggesting the next broad round of top-line estimate increases won’t occur until mid-June. As noted over the past week, we now believe most carriers can repeat if not slightly exceed their Q1 RASM gains in Q2.
Click here for report
ClueByFour: I believe you're going to be very surprised on May 9.
By the way, did you see where the AP reported Bob McAdoo, wrote in a research report that he expects "US Airways to make $6.45 profit per share this year, up from his previous estimate of 73 cents per share, excluding some one-time costs. McAdoo upgraded US Airways to "Overweight" from "Neutral Weight" and boosted his price target for the stock to $48 from $40."
In regard to specific results, I believe it all depends on accelearating cost cuts and revenue improvements, but I believe the company will post much better results than your normal pessimistic view, which is normally wrong.
By the way, can you tell me why you're more in tune with US Airways' financials than Wall Street analysts? I find that interesting, but on May 9 you will too!
Best regards,
USA320Pilot
700UW, can you tell me what Business Week referred to when they commented on "insider trading"? You're kidding about being right...nah...never mind. I know it's written in plain english and most people can understand that, then again...
By the way, in regard to anlayst reports today J.P. Morgan indicated:
March Mainline RASM +10.2%; Revenue +25% from February - J.P. Morgan Securities
· March mainline RASM +10.2% – Mainline system RASM rose 10.2% in March, consistent with our recently-strengthened 2006 outlook though of debatable immediate value against backdrop of earnings season. As hoped, March figures largely mirrored those of January, with domestic RASM rising 12.5%, roughly twice the international improvement of 6.2%.
· Carrier breakdown – March mainline revenue of $6.29 billion represents a 25% sequential improvement from February, nicely ahead of the 21% average and the second largest Mar-vs.-Feb improvement since at least 1995 - and the best ever for a March without Easter. Given this sequential revenue acceleration, it is becoming increasingly clear that RASM gains are not solely a function of capacity, with early-year fare increases likely to credit. We believe US Airways led the industry in mainline RASM improvement at 17%, followed by Northwest +12.5%, Delta +12%, United and Alaska +10%, American +8% and Continental +4%.
· Yields are just beginning to rise – On a rolling 12-month basis, domestic yields remain a stunning 17% below peak (pre-attack) levels, having bounced a mere 6% off all-time lows to levels roughly approximate with those of 2003/2004 (see chart in report). Accordingly, we see little if any risk of near-term passenger resistance to higher fares, all the more so given unleaded alternatives in shorter-haul markets.
· April RASM estimated +16% – Our preliminary, Easter-enhanced mainline RASM forecast for April is 16%, followed by 13% improvements in May and June. No change to full-year +9.5%, which we believe remains a Street high. We assume others may share our April view though underestimate the magnitude of May improvement…suggesting the next broad round of top-line estimate increases won’t occur until mid-June. As noted over the past week, we now believe most carriers can repeat if not slightly exceed their Q1 RASM gains in Q2.
Click here for report
ClueByFour: I believe you're going to be very surprised on May 9.
By the way, did you see where the AP reported Bob McAdoo, wrote in a research report that he expects "US Airways to make $6.45 profit per share this year, up from his previous estimate of 73 cents per share, excluding some one-time costs. McAdoo upgraded US Airways to "Overweight" from "Neutral Weight" and boosted his price target for the stock to $48 from $40."
In regard to specific results, I believe it all depends on accelearating cost cuts and revenue improvements, but I believe the company will post much better results than your normal pessimistic view, which is normally wrong.
By the way, can you tell me why you're more in tune with US Airways' financials than Wall Street analysts? I find that interesting, but on May 9 you will too!
Best regards,
USA320Pilot
SpinDoc
Veteran
Captain:
There has to be an underlying reason why LCC stock continues to rise, despite insane oil price increases, and your analysis is probably not too far from "street" expectations.
Don't pay much attention to the uneducated such as 700UW. He and his ilk spend an inordinate amount of time trying to discredit anything they are unfamiliar with, especially when it is positive news about LCC, and they do not know what they speak of.
Spin
SpinDoc said: "Captain: There has to be an underlying reason why LCC stock continues to rise, despite insane oil price increases, and your analysis is probably not too far from "street" expectations. Don't pay much attention to the uneducated such as 700UW. He and his ilk spend an inordinate amount of time trying to discredit anything they are unfamiliar with, especially when it is positive news about LCC, and they do not know what they speak of."
USA320Pilot comments: Spindoc, I agree. I hope all is well.
BoeingBoy said: "It's really simple - where are the SEC filing demonstrating insider buying? Those required SEC filings are public knowledge. The rest is also pretty simple - McAdoo's report is pretty good news for US, if his forecasts come true."
USA320Pilot comments: BoeingBoy, I think we both understand that "insider" trading occurs, it will not be reported in SEC filings, and it's up to federal officials to uncover wrong doing, if it happens. In regard to McAdoo's report I agree with your comment.
Nycbusdriver, here is some more news from the AWA ALPA MEC:
AWA MEC Special Meeting Notice – April 24, 2006
In accordance with ALPA Constitution and By-Laws Article IV – Master Executive Council; Section 3 Master Executive Council Meetings; Paragraph D.
Special Meetings: Notice is hereby given that Air Line Pilots Association America West Airlines Master Executive Council Chairman Capt. JR Baker has called for a Special Meeting to be held at 10:30 a.m. MST on Wednesday, April 26, 2006 at the ALPA AWA MEC Office, 432 N. 44th St. #340, Phoenix, Arizona 85008, at the request of Captain Rick Pitt, Local Council 62 Captain Representative and seconded by First Officer Ray Burkett, Local Council 82 First Officer Representative.
The agenda is as follows:
(1) Call to Order by Chairman.
(2) Roll Call of Delegates.
(3) Late Agenda Item Submissions (if any).
(4) Agenda Items:
(a) Discussion of Merger and Negotiating Strategies (Closed Session)
(B) Discussion of Replacement of Negotiating Committee Members and Appointment of New Negotiating Committee Members (Closed Session) © Adjournment.
Captain Peter Blandino
AWA MEC Secretary-Treasurer
Best regards,
USA320Pilot
USA320Pilot comments: Spindoc, I agree. I hope all is well.
BoeingBoy said: "It's really simple - where are the SEC filing demonstrating insider buying? Those required SEC filings are public knowledge. The rest is also pretty simple - McAdoo's report is pretty good news for US, if his forecasts come true."
USA320Pilot comments: BoeingBoy, I think we both understand that "insider" trading occurs, it will not be reported in SEC filings, and it's up to federal officials to uncover wrong doing, if it happens. In regard to McAdoo's report I agree with your comment.
Nycbusdriver, here is some more news from the AWA ALPA MEC:
AWA MEC Special Meeting Notice – April 24, 2006
In accordance with ALPA Constitution and By-Laws Article IV – Master Executive Council; Section 3 Master Executive Council Meetings; Paragraph D.
Special Meetings: Notice is hereby given that Air Line Pilots Association America West Airlines Master Executive Council Chairman Capt. JR Baker has called for a Special Meeting to be held at 10:30 a.m. MST on Wednesday, April 26, 2006 at the ALPA AWA MEC Office, 432 N. 44th St. #340, Phoenix, Arizona 85008, at the request of Captain Rick Pitt, Local Council 62 Captain Representative and seconded by First Officer Ray Burkett, Local Council 82 First Officer Representative.
The agenda is as follows:
(1) Call to Order by Chairman.
(2) Roll Call of Delegates.
(3) Late Agenda Item Submissions (if any).
(4) Agenda Items:
(a) Discussion of Merger and Negotiating Strategies (Closed Session)
(B) Discussion of Replacement of Negotiating Committee Members and Appointment of New Negotiating Committee Members (Closed Session) © Adjournment.
Captain Peter Blandino
AWA MEC Secretary-Treasurer
Best regards,
USA320Pilot
PITbull
Veteran
The only assertion one could make from the stock rising to over $40 in light of record rising oil prices is that someone from inside is working some deal for a buy out of U.
In my estimation, you would have to be a lunatic spending any money on airline stocks (except for shorting them)Or, if you knew there was a possible buyout.
Now, that is something to think about.
ClueByFour
Veteran
Really? Want to compare a history of prognostication on this forum and see who has a better batting percentage?
You are refuted with your first spin of McAdoo's quarterly estimates (essentially because you misrepresented what he said--intentionally) and now are backpeddling to cover yourself. You now include the "some one time costs" but even the company itself does not think it'll be profitable for 2006, and that was before oil spiked.
Keep backing up. It's entertaining.
Hey--since your prognostications are always right, when can we expect unqualified positive EPS from LCC?
*shrug* I made the better part of 20% by strategically shorting US between BKI and BKII. I'm reasonably sure that once the true costs and lack of synergies start to show themselves that I'll be able to replicate the process with LCC. Outside of shorting various carriers from time to time, I don't own anything in the airline sector. It's (with one arguable exception) garbage.
Want to print money on the market in both share price appreciation and dividends? Take a look at diversified industrials.
Walmartgreeter
Veteran
(a) Discussion of Merger and Negotiating Strategies (Closed Session)
( Discussion of Replacement of Negotiating Committee Members and Appointment of New Negotiating Committee Members (Closed Session) © Adjournment.
Looks like they are trying to nail that "give away gang" illness in the bud. Hope they work it out. Greeter.
( Discussion of Replacement of Negotiating Committee Members and Appointment of New Negotiating Committee Members (Closed Session) © Adjournment.
Looks like they are trying to nail that "give away gang" illness in the bud. Hope they work it out. Greeter.
This coming from a guy who is prejudice against people from the middle east and your ignorance on any oil thread shows, quit while you are behind.
SpinDoc
Veteran
Dude:
You're right. Sorry I tried to sway the rational people who read this forum. No, oil prices are not out of hand, and they have nothing to do with Islamic extremist actions in the Middle East. Sure, I hate the ideals and rhetoric of the Islamic extemists, and I would love nothing more than to see them all lined up against a wall and summarily executed, but I have no control over that. I only have my opinions, and if you disagree, then so be it. Now, if my dream came true and all of the Islamic extremists were killed, then we would have a lot of disappointed wealthy investors in the U.S. who are profiteering from the rise in oil prices, which are the direct result of the Islamic threats.
Is there not a positive bone in your body? Can't you at least give US Airways some positive energy to help it grow and get away from the negative headlines of the past? It matters not to me, I'm out of the airline industry after April 28. I'm just tired of negative people trying to tear down potential positive news about US Airways and the industry in general. I wish you a nice, pessimistic life as you continue your journey with a company that you obviously hate, and would love to see go down the tubes.
BoeingBoy
Veteran
- Nov 9, 2003
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Oh, I see.....
A reputable stock analyst not only knows about illegal insider trading but comments on it in his report, which is widely distributed as well as picked up by various media outlets and spread far and wide.
An interesting (though convoluted) theory except for the small fact that McAdoo did not mention insider trading in the report he issued this....whoops, yesterday....morning.
But if you still insist he did, and since appropriate SEC filings supposedly don't exist because these "trades" were illegal, how about doing what you do best - cut-n-paste McAdoo's insider trading comment directly from his report. After all, this alleged comment was supposedly referenced by various media reports you quoted so it's hardly priviledged information at this point - if it exists.....
Jim
BoeingBoy
Veteran
- Nov 9, 2003
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PITbull,
The only parties accumulating significant holdings (over the 5% threshold for reporting to the SEC) are PAR and Fidelity - not counting the other major investors initial purchase of shares, of course.
I have no idea what PAR is planning, if anything. I presume that Fidelity's fund managers are just making normal investment decisions, since their holdings are spread among a number of individual mutual funds.
My working assumption, until evidence appears to the contrary, is that positive news (McAdoo's upgrade and earnings revisions) plus the relatively small float for a company our size exaggerates the price movement.
It is interesting that other than PAR, none of the other initial investors is increasing their stake. Eastshore sold their options and ACE sold over 1/3 of their holdings - both to PAR. If something's afoot, apparently the only insider that knows is the director appointed by PAR.
Jim
PITbull
Veteran
Jim,
I could agree, however, the price has doubled since its open, and being that the last quarter had reported losses, no market conditions have improved, just have to scratch your head. What's with all this LCC hype when the business fundementals have not changed. In fact, the company is buying more a/c, and if the airline universe is still contending with "over capacity"... then something mysterious is going on.
Two Major legacies are in BK, and just like U and United when everyone, including wall street, thought they were going over the cliff, NW and Delta will survive and fly. I haven't seen any adjustments or corrections in the industry outside of dumping pensions plans and decreasing labor costs. Bottom line, however the cost savings is being eaten up by higher fuel prices. I recall that DP stated back last summer and in their POR argument that U could make a profit even at $60 a barrel...he didn't say anything about $75.
Unless U manipulates the books (which is illegal), I can't see LCC making any profit this quarter or this year. I suspect the LCC inner circles are hyping up the stock for their own personal gains. U management had the ability to make you see RED when everything was actually black. It was called hypnosis. They did it with the bk judge, investors, the Board and labor. I place these jokers in the same class as the Enron folks and World Coms.
I could agree, however, the price has doubled since its open, and being that the last quarter had reported losses, no market conditions have improved, just have to scratch your head. What's with all this LCC hype when the business fundementals have not changed. In fact, the company is buying more a/c, and if the airline universe is still contending with "over capacity"... then something mysterious is going on.
Two Major legacies are in BK, and just like U and United when everyone, including wall street, thought they were going over the cliff, NW and Delta will survive and fly. I haven't seen any adjustments or corrections in the industry outside of dumping pensions plans and decreasing labor costs. Bottom line, however the cost savings is being eaten up by higher fuel prices. I recall that DP stated back last summer and in their POR argument that U could make a profit even at $60 a barrel...he didn't say anything about $75.
Unless U manipulates the books (which is illegal), I can't see LCC making any profit this quarter or this year. I suspect the LCC inner circles are hyping up the stock for their own personal gains. U management had the ability to make you see RED when everything was actually black. It was called hypnosis. They did it with the bk judge, investors, the Board and labor. I place these jokers in the same class as the Enron folks and World Coms.
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
PITbull,
Like I said, I have absolutely no idea if anything is afoot behind the scenes or not.
As for the price doubling (more now), I look at that this way - it was above $30 in less than 1-1/2 months and above 40 in just over 3 months. After that early "euphoria" and positive analyst comments, there's been no upside movement till this week - 3-1/2 months of drifting with oil prices.
Now look at the float - initially only the stock issued to AWA shareholders and employees. Fidelity alone has accumulated most the shares represented by that initial float. Demand (for whatever reason) with limited supply equals increasing price.
Market conditions have changed vs last year at this time. More people flying, planes removed, higher load factors, higher fares (CNBC just had some expert on that said business fares are up 20% since last year), etc. The only bad changes are fuel and the steady encroachment of real LCC's (from a business standpoint only, obviously).
Does any of this mean a profit or a loss for this year? Who knows - what will happen with fuel prices, what will the competition do, what does the future hold for fares?
We agree on one thing, though. Investing in airlines is for the strong of heart and deep of pocket. Trading can be a different story, but is not for the faint of heart either. The big question I have is this - is PAR an investor or a trader?
Jim
Like I said, I have absolutely no idea if anything is afoot behind the scenes or not.
As for the price doubling (more now), I look at that this way - it was above $30 in less than 1-1/2 months and above 40 in just over 3 months. After that early "euphoria" and positive analyst comments, there's been no upside movement till this week - 3-1/2 months of drifting with oil prices.
Now look at the float - initially only the stock issued to AWA shareholders and employees. Fidelity alone has accumulated most the shares represented by that initial float. Demand (for whatever reason) with limited supply equals increasing price.
Market conditions have changed vs last year at this time. More people flying, planes removed, higher load factors, higher fares (CNBC just had some expert on that said business fares are up 20% since last year), etc. The only bad changes are fuel and the steady encroachment of real LCC's (from a business standpoint only, obviously).
Does any of this mean a profit or a loss for this year? Who knows - what will happen with fuel prices, what will the competition do, what does the future hold for fares?
We agree on one thing, though. Investing in airlines is for the strong of heart and deep of pocket. Trading can be a different story, but is not for the faint of heart either. The big question I have is this - is PAR an investor or a trader?
Jim
PITbull,
hope you don't mind me jumping in here...
That insiders do manipulate their stock, absolutely!
If you consider Parker and the management team part of the insiders, I'm not so sure they're in on it. If anything, it's to their advantage to have LCC go up slowly, over the next couple of years. For Parker this in most likely not a sprint...
They cannot sell until sometime starting in 2007.
PAR Aviation and the other investors are a different breed
