The Analyst's Start Weighing In
- Thread starter BoeingBoy
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robbedagain
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will they be proven wrong if the stock actually rises beyond $25?
usair_begins_with_u
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$20 is way too high... What kind of EPS does $20 buy? Oh wait.. there are no earnings...
You'd be much better off stuffing your $$$ in your matress, and you'd preserve more equity doing it.
You'd be much better off stuffing your $$$ in your matress, and you'd preserve more equity doing it.
As the airline emerges from bankruptcy its own words give investors enough reason not to buy in.
I'd like to point you to the top four reasons not to buy, as recounted by US Airways. Yes, you read that right. These come straight from the airline's S-1 filing, beginning on page 16 with "Risks Related to Our Business":
1. Fuel costs are high. "Continued periods of historically high fuel costs, significant disruptions in the supply of aircraft fuel, or significant further increases in fuel costs could have a significant negative impact on our operating results."
There are three factors to look at here. First, oil is, as of this writing, priced at around $67 per barrel. Second, no fewer than three times in the S-1 does the company say that its financial position may prevent it from obtaining futures contracts to hedge against the rising price of fuel. And, third, still-bankrupt United says that it needs oil to average around $50 per barrel over the next five years to meet its targets. It's probably a good bet that US Airways management is hoping for the same or better in its recovery plan.
2. Unwarranted optimism. "We may not perform as well financially as we expect following the merger."
The fiscal health of the new US Airways is completely dependent on being able to realize $600 million of what it calls "synergies." Reduced fleet size is expected to contribute $175 million. Reduced administrative overhead -- that is, facility closures and IT infrastructure cuts -- is expected to contribute $200 million more. And the $225 million that remains? Where will that come from? Your guess is as good as anyone's.
And don't be quick to say it will come from labor. The new airline has already squeezed its employees tight enough to get blood from a stone. And unions would likely resist anyway, having already filed objections to the new business plan. (Though, to be fair, those complaints were aimed at executive severance pay.)
3. The merger will be hard. "The integration of US Airways Group and America West Holdings following the merger will present significant challenges."
It sure will. Most mergers fail, after all. This ditty at the end of page 16 offers a good illustration of why: "The integration of US Airways Group and America West Holdings will be costly, complex, and time-consuming, and the managements of US Airways Group and America West Holdings will have to devote substantial effort to such integration that could otherwise be spent on operational matters or other strategic opportunities."
4. Losses are still huge. "US Airways Group continues to experience significant operating losses." The document goes on to say that losses will probably continue through at least 2006.
To sum up, in other words, what US Airways is saying: We're not yet sure we'll make money, but we'll figure it out. Trust us.
Sounds like the same old US Airways with a new ticker symbol. :down:
linemech.
I'd like to point you to the top four reasons not to buy, as recounted by US Airways. Yes, you read that right. These come straight from the airline's S-1 filing, beginning on page 16 with "Risks Related to Our Business":
1. Fuel costs are high. "Continued periods of historically high fuel costs, significant disruptions in the supply of aircraft fuel, or significant further increases in fuel costs could have a significant negative impact on our operating results."
There are three factors to look at here. First, oil is, as of this writing, priced at around $67 per barrel. Second, no fewer than three times in the S-1 does the company say that its financial position may prevent it from obtaining futures contracts to hedge against the rising price of fuel. And, third, still-bankrupt United says that it needs oil to average around $50 per barrel over the next five years to meet its targets. It's probably a good bet that US Airways management is hoping for the same or better in its recovery plan.
2. Unwarranted optimism. "We may not perform as well financially as we expect following the merger."
The fiscal health of the new US Airways is completely dependent on being able to realize $600 million of what it calls "synergies." Reduced fleet size is expected to contribute $175 million. Reduced administrative overhead -- that is, facility closures and IT infrastructure cuts -- is expected to contribute $200 million more. And the $225 million that remains? Where will that come from? Your guess is as good as anyone's.
And don't be quick to say it will come from labor. The new airline has already squeezed its employees tight enough to get blood from a stone. And unions would likely resist anyway, having already filed objections to the new business plan. (Though, to be fair, those complaints were aimed at executive severance pay.)
3. The merger will be hard. "The integration of US Airways Group and America West Holdings following the merger will present significant challenges."
It sure will. Most mergers fail, after all. This ditty at the end of page 16 offers a good illustration of why: "The integration of US Airways Group and America West Holdings will be costly, complex, and time-consuming, and the managements of US Airways Group and America West Holdings will have to devote substantial effort to such integration that could otherwise be spent on operational matters or other strategic opportunities."
4. Losses are still huge. "US Airways Group continues to experience significant operating losses." The document goes on to say that losses will probably continue through at least 2006.
To sum up, in other words, what US Airways is saying: We're not yet sure we'll make money, but we'll figure it out. Trust us.
Sounds like the same old US Airways with a new ticker symbol. :down:
linemech.
fatherabraham
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My history of buying anything associated with Usair ( or the many names over the years) is too embarrising to revisit. Perhaps I have finally learned my lesson or my stock expertise will continue with LCC going way up. No way I will purchase LCC.
FA
FA
