Author Topic: AAL - American Airlines Group  (Read 631 times)

nickenumbers

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AAL - American Airlines Group
« on: October 09, 2018, 02:12:55 PM »
Guys,

I am thinking about buying some options on AAL at $40 SP.  It still has a great long term thesis.  I believe that Oil Prices and the ongoing worry about the future recession is pushing it down.  [along with the other airlines.]

The PE today is 6.5.  both price and PE continue to drop.  Price down 6% today.

I get that oil prices are going to hurt its profitability, but I don't understand why such a large price movement in a week, month YTD.  I am guessing FEAR.

What do you guys think?
The fastest Cheetah still waits for the lame baby antelope.  ..patience..


Gregmal

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Re: AAL - American Airlines Group
« Reply #1 on: October 09, 2018, 02:43:13 PM »
Put this on the radar recently as well. 100% agree.

walkie518

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Re: AAL - American Airlines Group
« Reply #2 on: October 09, 2018, 03:06:14 PM »
Guys,

I am thinking about buying some options on AAL at $40 SP.  It still has a great long term thesis.  I believe that Oil Prices and the ongoing worry about the future recession is pushing it down.  [along with the other airlines.]

The PE today is 6.5.  both price and PE continue to drop.  Price down 6% today.

I get that oil prices are going to hurt its profitability, but I don't understand why such a large price movement in a week, month YTD.  I am guessing FEAR.

What do you guys think?
certainly an interesting play, should be noted that AAL doesn't hedge fuel costs and jet fuel is up in material percentage terms y/y

as a result, should oil continue its climb (however unlikely) the aircraft fuel and related taxes line will continue to increase... without digging further, this line on the P&L statement shows a $600m/qtr increase in fuel and related tax costs on $11.6B of revenues.  That is, ~5% of revenues up in smoke.

The updated guidance shows a further increase on cost with roughly the same amt of projected gallons consumed...at the same time, looks like they're hiking prices to combat those costs

perhaps unlikely due more to demand than anything else, but this could lead to erosion of utilized seat miles when some comps have kept hedge books intact?

Spekulatius

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Re: AAL - American Airlines Group
« Reply #3 on: October 09, 2018, 07:02:22 PM »
re AAL
 - trashy BB- credit 9 years into the recovery after a $10B buyback binge. Not my cup of tea.
To be a realist, one has to believe in miracles.

nickenumbers

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Re: AAL - American Airlines Group
« Reply #4 on: October 10, 2018, 06:15:21 AM »
re AAL
 - trashy BB- credit 9 years into the recovery after a $10B buyback binge. Not my cup of tea.

When I was in my 20s "Trashy" could be a rewarding quality in a Friday night date candidate  ;) ;).....  followed by Drama and a hangover!   :o
The fastest Cheetah still waits for the lame baby antelope.  ..patience..

Spekulatius

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Re: AAL - American Airlines Group
« Reply #5 on: October 10, 2018, 07:24:23 AM »
re AAL
 - trashy BB- credit 9 years into the recovery after a $10B buyback binge. Not my cup of tea.

When I was in my 20s "Trashy" could be a rewarding quality in a Friday night date candidate  ;) ;).....  followed by Drama and a hangover!   :o

Been there, done it. But as one gets older, the quality aspect becomes more important. Seems the same with stocks actually.
To be a realist, one has to believe in miracles.