john john said:
http://www.investopedia.com/articles/investing/011216/how-banning-buybacks-would-help-economy.asp
Buybacks are nothing more than a form of financial engineering. Banning them would force corporations to allocate more capital to organic growth. This would reduce layoffs, lead to more hiring, and even lead to wage growth.
you must not invest in anything or have a 401K or anything.
Buybacks aren't a bad thing in a time like now and, for me at least with my Delta stock, are making me money. Now I don't think AA offered its frontline stock like Delta did, but i have a feeling that at least some of the 401K at AA has something to do with AA stock.
Remember, its and up and down industry, we want to see the peaks and valleys get lower, we all need this industry to do better.
taking 6B and giving it to employees and giving investors nothing........not how we get there.
commavia said:
So would I, although Delta's "long-term debt and capital leases" isn't $4B, either, but rather $8.8B (at least as of 3Q15). Point taken - $8.8B is certainly considerably less than $20.5B. But then, when looking a debt less cash/near-cash, the gap between the two carriers definitely narrows ($5.0B vs $11.0B).
sorry, i used Delta's target because they have given one. IIRC AA hasn't. (unless I messed something during a call, completely possible.)
but you are right, 2016 number is more fair than the 2017 target. My bad.
4B has just been driven into my head so many times. can't help it.
commavia said:
We'll see. No question that AA and Delta are pursuing two fundamentally different financial strategies that impact multiple aspects of their business - fleet, balance sheet, etc. Time will tell how these divergent approaches actually work out.
I agree. I am a in the now investor(but oddly once I am in i prefer the long term) and I don't like what AA is doing. 2 years ago, I was all over it. Fuel is high, they are just going new fleet vs more than likely pissing money away on hedging.
but fuel dropped.......and now, man I want Parker to get his union contracts done (err....two reasons for that one) and start cleaning that balance sheet up. (and stop leasing *so* many planes)
Do that then they only thing I wont touche is UAL........and I'm not sure we will ever get to the point where that one happens.
FWAAA said:
The long-term obligations of Delta and AA are not very different if you look at long-term debt plus capital leases plus pension and postretirement benefits. As of 10/31/15, those total $21.0 billion at Delta and $26.3 billion at AA. On these items, AA owes $5.3 billion more than Delta.
At 10/31/15, AA was sitting on $8.2 billion of unrestricted cash and short-term investments (not including the worthless Venezuela currency) and DL was holding $3.8 billion. AA's cash is thus $4.8 billion more than Delta's total.
http://ir.delta.com/files/earnings/2015/3Q/Delta-Announces-September-Quarter-Profit.pdf
http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=irol-newsArticle_print&ID=2100647
While AA has significantly higher long-term debt plus capital leases, its overall picture isn't that much different than Delta's. AA is certainly pursuing a different strategy, and it might not be the winning one. But I believe that focusing solely on the different levels of long-term debt and leases is not the correct analysis.
If an economic slowdown occurs, and that slowdown is accompanied by high oil prices (like most slowdowns are), then AA's fuel bills will be lower than the competition. If the slowdown happens with low oil prices, then AA is screwed.
The periodic purchase of stock by AA (and all other profitable airlines) is the tax-efficient way to return excess cash to the shareholders and to prop up the share price. The fact that Delta is currently valued higher than AA is only really important if you're currently planning to sell. If you're a buyer or intend to hold stock for the long term, then lower stock prices aren't a problem.
ah.... my kind of guy/girl(?). (no sarcasm, I think everything you listed should be viewed as debt)
but sadly it isn't. Having said that, Delta has already said the pension is going to be the next big thing. (and have, as of late, been putting extra towards it, but SHOULD have been doing more) I haven't seen anything from AA addressing anything you listed.
I don't even want to see much done by AA,, I just wanna see some kind of commitment to the balance sheet. I feel like now is the time to maybe defer some planes and take that capex and put it to the balance sheet. I don't expect them to Delta it overnight but something would be nice.
Oh wanted to add, while yes, AA's fuel bill will be somewhat lower(remember the only "old" engines in the DL fleet are really the JT8Ds and i guess PW2000s), DL can park airplanes if it has unprofitable routes at the fuel price. AA really can't. saying that, if fuel goes up, I'm sure someone in Atlanta will be willing to lose billions on bad hedges again once it drops down.............
having said that, one thing I have learned is, just like commavia said, not a single one of us numbers people can agree on anything. I just like posting my opinion.