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Thread: American Airlines 2Q profit plunged 34.5 percent

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    Registered User NoOtPilot's Avatar
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    American Airlines 2Q profit plunged 34.5 percent


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    ... on higher fuel costs, and it reduced its forecast for full-year earnings.

    American, the world's biggest airline, said that it expects to spend about $2 billion more on fuel than it did last year.

    CEO Doug Parker called the second quarter perhaps American's most challenging quarter since the December 2013 merger with US Airways. Besides higher fuel, American's sales is not growing as fast as its major competitors. And it suffered a major blow in June when computer problems at regional subsidiary, PSA Airlines, caused the cancellation of more than 2,500 flights.
    Last edited by NoOtPilot; 07-26-2018 at 08:42 AM.

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    Quote Originally Posted by NoOtPilot View Post
    ... on higher fuel costs, and it reduced its forecast for full-year earnings.

    American, the world's biggest airline, said that it expects to spend about $2 billion more on fuel than it did last year.

    CEO Doug Parker called the second quarter perhaps American's most challenging quarter since the December 2013 merger with US Airways. Besides higher fuel, American's sales is not growing as fast as its major competitors. And it suffered a major blow in June when computer problems at regional subsidiary, PSA Airlines, caused the cancellation of more than 2,500 flights.
    Certainly not time to panic, but it is indeed another red flag. What should be taken into context is that times are good now and AA is flush with cash and can absorb THIS issue. But.........

    What about a true downturn ?

    This is by no means even close to that. What if that downturn (which like it or not is inevitable) is concurrent with (or a result of) even higher fuel costs ? AA has large multi-billion dollar pilot pension payments over the next few years. With its present debt, I find it questionable they could get more financing for anything, at least not without very unattractive interest rates and/or assets as collateral. What if they are forced to or even find it beneficial to sell things off like some or all the wholly-owned regionals ? That could definitely impact the flow. AA has plenty of pilots to hire, but likely can’t train them fast enough in the coming years to keep up with attrition. That means either pulling back market share (read: lost revenue) or watching the product suffer further. On the regional side there is almost certain to be that equation, but due to LACK of pilots to hire and that chokes revenue (and thus profit) as well.

    I only see a house of cards that can stand so long as no significant shake of the table occurs. That hasn’t occurred yet, but history proves we are overdue for a rumble and neither Delta, United, Southwest, Spirit or JetBlue have their own house of cards nearly so delicate. The last thing I want to see is AA fall back on hard times and have to resort to drastic measures to recover or kick the can. Another BK would be especially disasterous, both to AA pilots who would like see their A-Fund dumped along with possible significant stagnation and Envoy pilots whose flowtune would stop.

    Remember the Hot Hand Fallacy.

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    Quote Originally Posted by Beagleboy View Post
    Certainly not time to panic, but it is indeed another red flag. What should be taken into context is that times are good now and AA is flush with cash and can absorb THIS issue. But.........

    What about a true downturn ?

    This is by no means even close to that. What if that downturn (which like it or not is inevitable) is concurrent with (or a result of) even higher fuel costs ? AA has large multi-billion dollar pilot pension payments over the next few years. With its present debt, I find it questionable they could get more financing for anything, at least not without very unattractive interest rates and/or assets as collateral. What if they are forced to or even find it beneficial to sell things off like some or all the wholly-owned regionals ? That could definitely impact the flow. AA has plenty of pilots to hire, but likely can’t train them fast enough in the coming years to keep up with attrition. That means either pulling back market share (read: lost revenue) or watching the product suffer further. On the regional side there is almost certain to be that equation, but due to LACK of pilots to hire and that chokes revenue (and thus profit) as well.

    I only see a house of cards that can stand so long as no significant shake of the table occurs. That hasn’t occurred yet, but history proves we are overdue for a rumble and neither Delta, United, Southwest, Spirit or JetBlue have their own house of cards nearly so delicate. The last thing I want to see is AA fall back on hard times and have to resort to drastic measures to recover or kick the can. Another BK would be especially disasterous, both to AA pilots who would like see their A-Fund dumped along with possible significant stagnation and Envoy pilots whose flowtune would stop.

    Remember the Hot Hand Fallacy.
    https://www.airlineapps.com/Default.asp

    It's a pilot's market.

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    Quote Originally Posted by snippercr View Post
    Your point ?

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    Capitulate, what we do best.

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    American also will grow more slowly than it planned later this year, even with those moves, American again cut its forecast of full-year profit.

    American trimmed planned growth in passenger-carrying capacity in the third and fourth quarters and said it will delay delivery of some new planes starting next year to conserve cash from 2019 through 2021.

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    I’m not worried.....Doug said we’ll never lose money again

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    Quote Originally Posted by TheRaven View Post
    I’m not worried.....Doug said we’ll never lose money again
    👌👌🏻👌🏼👌🏽👌🏿
    “In Doug We Trust”

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    A corporation with a profit plunge of 34%................in THIS economy and business environment ?

    What happens when the cycle turns South as it inevitably does ?

    The term “living on borrowed time” comes to mind for some reason.

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    Quote Originally Posted by Beagleboy View Post
    A corporation with a profit plunge of 34%................in THIS economy and business environment ?

    What happens when the cycle turns South as it inevitably does ?

    The term “living on borrowed time” comes to mind for some reason.
    Easy Victor, easy Victor.

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    Quote Originally Posted by snippercr View Post
    Easy Victor, easy Victor.
    If some form of Evac does occur at AA in the future, pilots should know that history has proven they stay onboard breathing toxic smoke until management and the shareholders get out safely.

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