signals
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Warning Will Robinson AirTrash $1.46
US Airways $1.76
US Airways will post $600 million loss.
- Thread starter WCT
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Warning Will Robinson AirTrash $1.46
US Airways $1.76
Im not an accountant, but I've had goodwill on my balance sheet before...
The easiest way I can think of to describe goodwill is, when one company acquires another one, there are generally assets on the other company's balance sheet that nobody knows what to do with OR some form of "overvalue" - meaning, you are paying more for the new company than it is actually worth in tangible assets, but you need to bring the two sets of numbers together, so you place that discrepancy amount in goodwill.
Normally, they are just depreciated with a "depreciation schedule", and removed over time. But if they are "tested" or "verified", and the goodwill has no real value, a company is usually better off just taking a write down to get it off the balance sheet, since it really doesnt have a value anyway. It just makes your company look like it is worth more than it really is, and it usually just becomes something that isnt worth maintaining since it really has no value anyway.
It has nothing to do with cash position or liquid assets.
The easiest way I can think of to describe goodwill is, when one company acquires another one, there are generally assets on the other company's balance sheet that nobody knows what to do with OR some form of "overvalue" - meaning, you are paying more for the new company than it is actually worth in tangible assets, but you need to bring the two sets of numbers together, so you place that discrepancy amount in goodwill.
Normally, they are just depreciated with a "depreciation schedule", and removed over time. But if they are "tested" or "verified", and the goodwill has no real value, a company is usually better off just taking a write down to get it off the balance sheet, since it really doesnt have a value anyway. It just makes your company look like it is worth more than it really is, and it usually just becomes something that isnt worth maintaining since it really has no value anyway.
It has nothing to do with cash position or liquid assets.
autofixer
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http://www.bloomberg.com/apps/news?pid=new...id=a4f4NqjVsrW8
Perhaps we have reached the tipping point for jet fuel? It really is supply and demand.
Once the "goodwill" is removed, the airlines are cheaper to purchase, ie., consolidation. Now it looks as if jet fuel will come down and profits may return soon. NO GIVEBACKS!
Perhaps we have reached the tipping point for jet fuel? It really is supply and demand.
Once the "goodwill" is removed, the airlines are cheaper to purchase, ie., consolidation. Now it looks as if jet fuel will come down and profits may return soon. NO GIVEBACKS!
InternationalShannon
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call sign cocktails? I like rum and coke with cherry in it.
Just saying.
Art at ISP
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Its ironic, that while unrelated, US is writing down goodwill. Maybe that's because there is none....
No goodwill from customers, little if any from front line employees.......
On a more serious note, where are the REAL solutions to the ongoing problems? Where are operational efficiency improvements? Where are RATIONAL fares? Where is consistency in product? When will they realize they are putting bandaids on stab wounds?
OK keep removing things and charge for what's left....and see how long you last.....
I wonder how they would weather the storm with a competent management team, but unfortunately that's not the case here.....
No goodwill from customers, little if any from front line employees.......
On a more serious note, where are the REAL solutions to the ongoing problems? Where are operational efficiency improvements? Where are RATIONAL fares? Where is consistency in product? When will they realize they are putting bandaids on stab wounds?
OK keep removing things and charge for what's left....and see how long you last.....
I wonder how they would weather the storm with a competent management team, but unfortunately that's not the case here.....
sharktooth
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Agreed.
If you made $20,000 in 1988 you need to make $36,111 to stay the same in 2008. $50,000 in 1988 you should be making $90,277 now.
Hi Jim,
Yours is usually a voice of reason on this board. I've read that LCC had a fuel hedge of just over 50% for Q2. I think that only LUV had a better hedge. DAL, AMR, and CAL announced earnings far better than expected if you overlook "goodwill" writedown for Q2. Any chance in your humble opinion that LCC surprises on Tuesday? I don't think loses will be that large (-$1.27) I did buy shares last week.
Also, I would like your take on oil. Is it a bubble?
Thanks ever so much for your guidance.
Regards,
20+
Yours is usually a voice of reason on this board. I've read that LCC had a fuel hedge of just over 50% for Q2. I think that only LUV had a better hedge. DAL, AMR, and CAL announced earnings far better than expected if you overlook "goodwill" writedown for Q2. Any chance in your humble opinion that LCC surprises on Tuesday? I don't think loses will be that large (-$1.27) I did buy shares last week.
Also, I would like your take on oil. Is it a bubble?
Thanks ever so much for your guidance.
Regards,
20+
BoeingBoy
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With fuel hedging, you really need to look at not just percentage but also equivalent crude price hedged at. I really haven't researched the info for all the bigger airlines, but WN is hedged for about 70% of this year's fuel needs at about $51/bbl while US was hedged for 56% of 2nd quarter fuel needs at $66-75/bbl. So both the percentage and crude equivalent price have to be considered.
I suppose US could always surprise on the positive side - IIRC they did by a few cents/share in the 1st quarter. First Call's consensus is saying that the 2nd quarter will be the best this year by a significant margin (no surprise there since 2nd quarter is usually the best), with about a $1 billion loss for the year before special items. Of course, the consensus changes every few days as analyst's revise their estimates, so it could change significantly going forward.
I have no idea whether even current crude prices represent a bubble (closed under $129/bbl on Friday, down from the peak of about $147/bbl). However, the people who track world demand/supply and associated developments - the IEA - say speculation has no more than a small impact on crude prices, certainly not the $60 or more per bbl that the airlines are saying. I think it was Fed Chairman Berneke (sp?) that said basically the same when testifying before Congress last week. I did love the spin the airlines put out - airline fuel hedging isn't speculation because the airlines take delivery of oil. When was the last time an airline took delivery of crude oil, or even the heating oil that is generally used for hedging?
Jim
I suppose US could always surprise on the positive side - IIRC they did by a few cents/share in the 1st quarter. First Call's consensus is saying that the 2nd quarter will be the best this year by a significant margin (no surprise there since 2nd quarter is usually the best), with about a $1 billion loss for the year before special items. Of course, the consensus changes every few days as analyst's revise their estimates, so it could change significantly going forward.
I have no idea whether even current crude prices represent a bubble (closed under $129/bbl on Friday, down from the peak of about $147/bbl). However, the people who track world demand/supply and associated developments - the IEA - say speculation has no more than a small impact on crude prices, certainly not the $60 or more per bbl that the airlines are saying. I think it was Fed Chairman Berneke (sp?) that said basically the same when testifying before Congress last week. I did love the spin the airlines put out - airline fuel hedging isn't speculation because the airlines take delivery of oil. When was the last time an airline took delivery of crude oil, or even the heating oil that is generally used for hedging?
Jim
Jim,
Thanks for your views. I could not believe when I read that 30 million shares of LCC were shorted earlier this month. Having $2.8 in cash and the shorts trying to trade the stock as though BK happening anyday. I know things are bad, but they aren't THAT bad.
As for oil go baby go (Lower)!
Regards,
20+
Thanks for your views. I could not believe when I read that 30 million shares of LCC were shorted earlier this month. Having $2.8 in cash and the shorts trying to trade the stock as though BK happening anyday. I know things are bad, but they aren't THAT bad.
As for oil go baby go (Lower)!
Regards,
20+
BoeingBoy
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When is $2.8 billion less than 2.1 billion? When over $700 million of it is restricted and can't be spent.
Jim
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