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LUV Falling Hard, DAL Now Leads US Market Cap  
User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Posted (5 years 9 months 2 days 18 hours ago) and read 7922 times:

According to Bloomberg today..

LUV -17.94% 8.05 per share, $5.96B market cap

DAL -1.98% 10.37 per share, $7.28B market cap

AMR -1.68% 7.60 per share, $2.11B market cap

While WN's earnings report on Wednesday was a surprise, I have no idea why it's continuing to take such a beating today - I'd have thought Wednesday/Thursday were the leveling days. I'm not sure on what day the market cap of DAL actually surpassed LUV, but I believe this is the first time in many, many years that LUV was not at the top of market capitalization in the US airline industry.

Something else go down at WN today?

Times they are a changing.  old 

Now who knows when the tide swings back and WN is back on top - perhaps next Wednesday, right after Delta's earnings report?
 Yeah sure


Life's tough. It's even tougher if you're stupid. J. Wayne
36 replies: All unread, showing first 25:
 
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 1, posted (5 years 9 months 2 days 18 hours ago) and read 7897 times:

this is a major reversal. WN has done well for several years based on its fuel hedges. now that fuel prices are low enough that those hedges are not as valuable for WN, competitors have an advantage.

WN execs were quite frank about the soft demand they see ahead and they confirmed it with the restructuring of their orders from Boeing.

DL might fall after its earnings report but they have already said they expect to have hedge losses so there is an expectation already in place that should have guided pricing of its stock. CO also provided guidance that should moderate swings in its stock price. Stock price right now is all about expectations about what is ahead.


User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 2, posted (5 years 9 months 2 days 18 hours ago) and read 7883 times:

Agreed there - DAL lost about $2 per share amidst AMR, UAL, and LUV's earnings reports this week, so it may be true that they've already absorbed some portion of potential losses on shares ahead of their own announcement.


Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineKELPkid From United States of America, joined Nov 2005, 6407 posts, RR: 3
Reply 3, posted (5 years 9 months 2 days 18 hours ago) and read 7868 times:

Well, buying up one of your competitors to create the new largest airline in the USA is cheating in my books...  Wink We'll see how long this stays the same, especially now that WN is challenging the former NW fortress hub at MSP...  Smile


Celebrating the birth of KELPkidJR on August 5, 2009 :-)
User currently offlineMariner From New Zealand, joined Nov 2001, 25415 posts, RR: 86
Reply 4, posted (5 years 9 months 2 days 18 hours ago) and read 7849 times:
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Quoting Breaker1011 (Thread starter):
LUV -17.94% 8.05 per share, $5.96B market cap

LUV shares rose about 17% yesterday, after the earnings report. But today some analysts are being slightly more pessimistic than yesterday:

http://finance.yahoo.com/news/Analys...s-pessimism-hits-apf-14140051.html

"Ray Neidl, an analyst with Calyon Securities, downgraded Southwest to "Sell," saying the carrier will be challenged to control costs while cutting capacity 4 percent this year -- the first time that Southwest has ever planned to shrink its growth."

So really the shares are where they were before the earnings report.

mariner

[Edited 2009-01-23 11:59:03]


aeternum nauta
User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 5, posted (5 years 9 months 2 days 18 hours ago) and read 7827 times:



Quoting Mariner (Reply 4):
So really the shares are where they were before the earnings report.

Thanks for the info! Does anyone know then at what point in the past few weeks LUV fell from the top in capitalization?



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 6, posted (5 years 9 months 2 days 18 hours ago) and read 7787 times:

also, LFCs keep their costs low by growing. CO and DL have incorprorated that into their business philosophy. When LFCs stop growing, their costs quickly start going up. Network carriers have had slower growth rates so the cost increases are not as dramatic when they stop growing. Look at the non-fuel CASM increases for AA and UA and you will see that they are seeing significant CASM increases as they pull capacity out. It is very hard to cut capacity and keep costs constant.

User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 7, posted (5 years 9 months 2 days 17 hours ago) and read 7549 times:



Quoting KELPkid (Reply 3):
We'll see how long this stays the same, especially now that WN is challenging the former NW fortress hub at MSP...

WN flying into MSP might hurt DL a bit on the yield side, you bet - but it will certainly take more than a few new routes to have a net positive effect on LUV's share price given that WN growth plan overall has been sliced so. Operating into MSP, and especially LGA in 2009, counter to WN's past strategy of avoiding high-cost, congestion prone airports, will be interesting to watch though, and not necessarily great for it's CASM prospects.

Regardless, NW always held their own against ATA at MSP, WN vs. DL probably won't be much different.



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineMariner From New Zealand, joined Nov 2001, 25415 posts, RR: 86
Reply 8, posted (5 years 9 months 2 days 16 hours ago) and read 7477 times:
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Quoting Breaker1011 (Reply 7):
but it will certainly take more than a few new routes to have a net positive effect on LUV's share price given that WN growth plan overall has been sliced so.

LUV has never been a high flying share. It was regarded more as a "widows and orphans" stock - the safest place (at least in airlines) to put your money. No great highs and no great lows - just safe.

To some extent, that has been lost, this is a bad time for all airlines. But when the recovery happens (as it will) LUV shares will recover, too, and hopefully will get back to that unique status.

Even so, there will be more immediate profit to be made on other airline shares, the real high-fliers.

mariner



aeternum nauta
User currently offlineJFKMan From United States of America, joined Mar 2007, 598 posts, RR: 1
Reply 9, posted (5 years 9 months 2 days 15 hours ago) and read 7292 times:

DAL cap is 3.17B....according to Google Stocks.

Look at the stock page. Although Bloomberg is agreeing with your #.

Anyone understand?

[Edited 2009-01-23 14:40:23]


US / AA - JFK / TPA
User currently offlineTWA902fly From United States of America, joined Dec 1999, 3128 posts, RR: 4
Reply 10, posted (5 years 9 months 2 days 15 hours ago) and read 7235 times:

Speaking of only domestic passenger numbers... how does DL+NW+connection carriers compare with Southwest now?

'902



life wasn't worth the balance, or the crumpled paper it was written on
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17659 posts, RR: 46
Reply 11, posted (5 years 9 months 2 days 15 hours ago) and read 7202 times:



Quoting Breaker1011 (Thread starter):
have no idea why it's continuing to take such a beating

The fuel hedges were protecting WN forever from making lots of very difficult decisions. Now not only are they gone, but they too are hurting WN.



E pur si muove -Galileo
User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 12, posted (5 years 9 months 2 days 15 hours ago) and read 7125 times:



Quoting JFKMan (Reply 9):

Interesting - I seem to remember noticing the difference on Google/Yahoo in the past as well.

The Street, CNN, TDA, and Bloomberg show the higher number.

Yahoo, Google, Forbes and WSJ the lower.

Someone smarter than I probably knows why I hope!  Confused



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineCubsrule From United States of America, joined May 2004, 23148 posts, RR: 20
Reply 13, posted (5 years 9 months 2 days 14 hours ago) and read 7042 times:



Quoting Breaker1011 (Reply 7):
Regardless, NW always held their own against ATA at MSP, WN vs. DL probably won't be much different.

I disagree. TZ never had plans for MSP beyond a spoke. Outside of small Texas towns (CRP), WN doesn't really have spokes. TZ had an aircraft that was far too large for the market. WN's are closer to the right size. I don't know that MSP will be a rousing success for WN, but WN will certainly be the most serious low cost competitor that CHI-MSP has seen.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 14, posted (5 years 9 months 2 days 10 hours ago) and read 6708 times:

when we have discussed market caps before, the factor that has emerged as causing differences is the number of shares outstanding.

User currently offlineB777fan From United States of America, joined Oct 2004, 171 posts, RR: 0
Reply 15, posted (5 years 9 months 2 days 5 hours ago) and read 5914 times:



Quoting JFKMan (Reply 9):
Look at the stock page. Although Bloomberg is agreeing with your #.

Anyone understand?

I haven't researched what the current shares outstanding is for DAL but the two values for DAL market cap are based on two different shares outstanding numbers, depending on which source you use.

Somebody hasn't properly updated their database since the merger. Don't know who. I'll find the real number tomorrow - if I remember.


User currently offlineF9Animal From United States of America, joined Dec 2004, 5077 posts, RR: 28
Reply 16, posted (5 years 9 months 2 days 5 hours ago) and read 5820 times:



Quoting Breaker1011 (Thread starter):
While WN's earnings report on Wednesday was a surprise, I have no idea why it's continuing to take such a beating today - I'd have thought Wednesday/Thursday were the leveling days.

As you know, it is a day by day thing. Next week, another company will take the brunt of what we see today. Rest assured though, WN is very stable, and still very healthy. It is one of the few airlines that I feel comfortable enough in investing in. They are going to be fine, and I think the issue you mention will change in coming weeks/months.

Quoting Mariner (Reply 8):
LUV has never been a high flying share. It was regarded more as a "widows and orphans" stock - the safest place (at least in airlines) to put your money. No great highs and no great lows - just safe.

To some extent, that has been lost, this is a bad time for all airlines. But when the recovery happens (as it will) LUV shares will recover, too, and hopefully will get back to that unique status.

Even so, there will be more immediate profit to be made on other airline shares, the real high-fliers.

mariner

Very well said Mariner. It is indeed one of the few airlines that I feel comfortable with my investments in.

Quoting MaverickM11 (Reply 11):
The fuel hedges were protecting WN forever from making lots of very difficult decisions. Now not only are they gone, but they too are hurting WN.

You are correct. However, I think WN will overcome this soon. Let's face it, they were so very good at hedging so much before oil took the direction it did. They made a killing, and I am sure they put a ton of that extra cash away for a rainy day (which I would guess the rainy day or days is upon us). They will come out soon, and be back on top.



I Am A Different Animal!!
User currently offlineBobnwa From United States of America, joined Dec 2000, 6490 posts, RR: 9
Reply 17, posted (5 years 9 months 2 days 1 hour ago) and read 5356 times:



Quoting KELPkid (Reply 3):
Well, buying up one of your competitors to create the new largest airline in the USA is cheating in my books

Didn't DL and NW only directly compete on 12 routes. How is this cheating buying up competitors?

Quoting TWA902fly (Reply 10):
Speaking of only domestic passenger numbers... how does DL+NW+connection carriers compare with Southwest now?

The new Delta is larger by almost 19% in measuring passenger numbers.


User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 18, posted (5 years 9 months 2 days ago) and read 5096 times:



Quoting F9Animal (Reply 16):
You are correct. However, I think WN will overcome this soon. Let's face it, they were so very good at hedging so much before oil took the direction it did. They made a killing, and I am sure they put a ton of that extra cash away for a rainy day (which I would guess the rainy day or days is upon us). They will come out soon, and be back on top.

WN has been living off of its hedge gains for several years. It is well known that WN has been losing money on its flying operations and have only been able to sustain it because their hedges have provided the cash they have used to move into new markets and establish themselves.
WN doesn't have that advantage as long as fuel remains low.... and it is possible that by the time fuel goes up again, the amount of hedges WN holds at low prices will no longer be much of an advantage.
Further, it is very likely that the network carriers are hedging as much as they can to lock in these low fuel prices - just as WN did 5 years ago in the post 9/11 period. If one or more network carriers gain fuel hedge benefits similar to WN, then WN doesn't have the advnatage it once did. But it isn't certain that carriers are hedging far into the future because they are goin through cash trying to pay for their current bad hedges. Not all airlines are in the same position cashwise, though, as evidenced by the difference between UA and AA's cash positions which were reported this week.DL estimated that it would have $6B in cash by the end of the year which would put in with nearly twice as much cash as other network carriers. That cash has the ability to carry DL through difficulties that could take other carriers down .


User currently offlineRwy04LGA From United States of America, joined Jul 2005, 3176 posts, RR: 8
Reply 19, posted (5 years 9 months 1 day 23 hours ago) and read 4777 times:



Quoting KELPkid (Reply 3):
Well, buying up one of your competitors to create the new largest airline in the USA is cheating in my books...

Delta's the largest airline in the WORLD, not just the USA.



Just accept that some days, you're the pigeon, and other days the statue
User currently offlineB777fan From United States of America, joined Oct 2004, 171 posts, RR: 0
Reply 20, posted (5 years 9 months 1 day 21 hours ago) and read 4300 times:



Quoting B777fan (Reply 15):
Somebody hasn't properly updated their database since the merger. Don't know who. I'll find the real number tomorrow

Looking at DAL filings, in rough numbers, they had a little more that 300 million shares outstanding prior to the merger and issued around 300 million shares to NW share holders.

They now have 630.8 million shares outstanding for a Mkt Cap of about $6.5 billion.

So the real story seems to be that two large majors combined and the combination is only marginally worth more than LUV at $5.9 billion. I would bet on LUV.


User currently offlineBobnwa From United States of America, joined Dec 2000, 6490 posts, RR: 9
Reply 21, posted (5 years 9 months 1 day 21 hours ago) and read 4238 times:



Quoting B777fan (Reply 20):
They now have 630.8 million shares outstanding for a Mkt Cap of about $6.5 billion.

Bloomberg says 7.28B for Delta.

Quoting B777fan (Reply 20):
I would bet on LUV.

You would bet on LUV to do what? Have the largest market cap? The numbers show they don't.


User currently offlineKELPkid From United States of America, joined Nov 2005, 6407 posts, RR: 3
Reply 22, posted (5 years 9 months 1 day 19 hours ago) and read 3625 times:



Quoting Bobnwa (Reply 17):
Didn't DL and NW only directly compete on 12 routes. How is this cheating buying up competitors?

If you want a ticket from point ABC to point DEF, in the USA, and you punch it up in a site, like say Orbitz or Cheap Tickets, are not one of your ticket choices NW and one of them DL (well, until a couple of months ago anyways....  Wink ). That's competition. I wish the SEC would see things that way, too...  Sad

As others have mentioned, Wall St. is in the process of deciding whether the merged companies really represent that much market cap. By many appearances, DL has chosen to dilute its share value by doubling the amount of outstanding stock:

Quoting B777fan (Reply 20):
Looking at DAL filings, in rough numbers, they had a little more that 300 million shares outstanding prior to the merger and issued around 300 million shares to NW share holders.

They now have 630.8 million shares outstanding for a Mkt Cap of about $6.5 billion.

So the real story seems to be that two large majors combined and the combination is only marginally worth more than LUV at $5.9 billion. I would bet on LUV.




Celebrating the birth of KELPkidJR on August 5, 2009 :-)
User currently offlineBreaker1011 From United States of America, joined Nov 2007, 938 posts, RR: 2
Reply 23, posted (5 years 9 months 1 day 19 hours ago) and read 3563 times:



Quoting KELPkid (Reply 22):
By many appearances, DL has chosen to dilute its share value by doubling the amount of outstanding stock:

Not exactly how it works - DAL now includes all share value of former NWA as it was a pure equity exchange. X shares of DAL (cant remember the ratio) traded for 1 share of NWA. So Delta didn't "dilute" their shares - they simply brought NWA's into the fold in a manner of speaking. All previous DAL + NWA shares = new DAL. (someone else could probably state more eloquently!).

Quoting B777fan (Reply 20):
So the real story seems to be that two large majors combined and the combination is only marginally worth more than LUV at $5.9 billion. I would bet on LUV.

As a LUV and a DAL shareholder, I agree with you!



Life's tough. It's even tougher if you're stupid. J. Wayne
User currently offlineFrmrCAPCADET From United States of America, joined May 2008, 1729 posts, RR: 1
Reply 24, posted (5 years 9 months 1 day 18 hours ago) and read 3303 times:

I can't imagine that anyone would think that Delta-NW oght not to be worth a whole lot more than SW, and if Delta solves the 'legacy' problems it will. It is a huge airline. WN is merely very large. And I see today/yesterday WN has pulled another of the fair cutting moves/ploys/stunts. They know they can afford it more than anyone else. Cheeky of them. I like both airlines.


Buffet: the airline business...has eaten up capital...like..no other (business)
25 Atrude777 : I am not understanding why this is a big deal? This was expected when NW/DL merged, they would rise above Southwest. This would be a bigger deal for S
26 B777fan : ??? No, for LUV to have the larger value in the future. As I stated, DAL does have a larger market cap, but not much bigger than perhaps combining tw
27 Brilondon : This is probably one of the best cases for a merger. There is very little over lap in terms of their network. They each brought something of value to
28 WorldTraveler : market values are merely representations of what investors believe a company is worth. The bigger is NOT that DAL surpassed LUV but instead the timing
29 B777fan : OK. Now that DAL has reported, we have a more applicable comparison. Results, LUV's market cap is about 5.6 and DAL's is know down to around 5
30 KELPkid : At least WN doesn't lose $1.4 Billion of other people's, erm, their investor's money in one fatal swoop
31 WorldTraveler : as of 2.30 pm LUV is at 5.3 and DAL is at 5.5. .
32 B777fan : I'm not sure about that. I don't think DAL has gotten above about 5.1 since about a half hour after opening. Regardless. Your earlier post about comp
33 United1 : Bloomberg says that DAL is 5.578B LUV is 5.378B.....
34 UnitedSuperDC8 : Market cap means nothing..Investors care about cash flow and earnings per share and somewhat the P/E ratio. I believe if you check those numbers, it i
35 WorldTraveler : market cap IS the value of the company and it reflects all the items you stated. no one is doubting that WN is a stronger company... they are clearly
36 Pliersinsight : Short Interest is telling a lotabout where these shares are headed: LUV Short Interest Shares Short (Current Month) 25.9M Short Ratio 3.0x Short Inter
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