Bobbydgg From United States of America, joined Feb 2001, 98 posts, RR: 0 Posted (12 years 2 months 3 weeks 2 days 14 hours ago) and read 944 times:
Why has Bethune portray continental in such dire straits if they were the only airline to be profitable in the last quarter? Is this just a ploy to get governmental assistance? Also, people say that they have increased exposure to the tragedy b/c of their presence in the NYC area, but hubs are rarely created to serve O&D passengers.
CALPilot From United States of America, joined Oct 1999, 996 posts, RR: 14 Reply 1, posted (12 years 2 months 3 weeks 2 days 13 hours ago) and read 882 times:
Although we have made good returns the last few years, what peolpe continue to NOT understand is the concept of "Margins". The airlines operate on very thin ones. We have Huge amounts of overhead costs. We lease and own equipment that costs sometimes $100 million dollars each. When Revenues drop 40-50% we can't cover the "margin". And one last thing for those who say what about the little guy, folks the Airline Industry is the top of the food chain for commerce, and infrastructure, if we go down first there won't be the little guy. Please contact your US. Rep. and support HR2891, its not just for little old CALPilot its for the good of the country.
Bobby, thats a little off base, lets make it short, For all the airlines its a cash, and debt problem.
777gk From United States of America, joined Jun 2000, 1641 posts, RR: 19 Reply 2, posted (12 years 2 months 3 weeks 2 days 12 hours ago) and read 830 times:
CALPilot is 100% correct, and I echo his sentiments regarding writing to a Congressman in support of HR2891. The airline industry is one of the most complex and volatile businesses in the world; one in which an event like this will have more fallout on than any other. Our stock value has plunged more than 60% in the last 4 days, and we are in dire need of an large cash infusion on a scale that only the government can deliver.
Bobbydgg From United States of America, joined Feb 2001, 98 posts, RR: 0 Reply 3, posted (12 years 2 months 3 weeks 2 days 10 hours ago) and read 796 times:
Thanks for the info, I see that you all are both tenured pilots for Continental and appreciate your insider's perspective. My next question regards your outlook for the future...is it possible that these capacity cuts will benefit the airlines in the long run b/c those routes that were cut were (i would assume) the ones that failed to cover the margins of which you spoke earlier? Does Continental's recent success confer any sort of advantage for its future (i.e less debt)? As I see it right now, airlines are undergoing cost cutting efforts that may prove to be rather beneficial when the economy finally hits the proverbial bottom and begins to rise...is this accurate? Also, is Continental in a better situation to manage this situation because of the structure of its respective pay scales, much has been made of union-led raises at Delta, United, and American which, undoubtedly, is a hindrance at a time like this. Last week's shutdown and its residual effects have proven to Americans what a vital role the airlines play in the proper function of our commercial system. My feeling is that increasing emphasis will be placed on this sector of the economy and, with a little government aid and an economic recovery, the airline industry will regain its strength. Despite a temporary decline in demand, the industry has not been fundamentally changed and an argument could even be made that investors will pay increasing amounts of attention to airline stocks now that the importance of the sector has been brought under the national spotlight. As you may be able to tell, I am a known bull. Anyway, please share your thoughts on this analysis...I understand that you all have a much broader scope of ideas from which to draw. Thanks in advance.
B747-337M From , joined Dec 1969, posts, RR: Reply 4, posted (12 years 2 months 3 weeks 2 days 10 hours ago) and read 790 times:
Gordon's actions in the last week have totally flummoxed me. Yes, Continental is highly leveraged (DE ratio of 3.25 is one of the highest among the majors), but they were sitting pretty atop a decent stash of cash as of Q2. Heck, they even had positive CASM/RASM spreads.
My initial gut reaction was that he was posturing to try and rush federal dollars through. Then when they announced their intention to default on the lease payments, I was stunned. That was taking it too far for just posturing. Not only did that announcement hurt CAL, but it also forced both Moodys and S&P to downgrade notes for the entire industry. I don't see the logic in deferring his debt by 10 days at the cost of killing his stock price. The same cash will be used to pay it off and the revenue flow is not likely to change significantly over that period.
Was Gordon's miracle recovery just a house of cards waiting to collapse at the first sign of trouble? Or was the decision to buy back the equity from Northwest in January something that Gordon should have listened to Greg Brenneman about and NOT proceeded with? Too many questions need to be answered, and I'm afraid there isn't enough information out there right now to answer all of them.
I'm just keeping my fingers crossed for my many friends that work for CAL that they pull through this with as little bloodshed as possible. If CAL (who arguably had the best management team the industry has seen in years) is allowed to fail, what hope is there for anyone else?
CALPilot From United States of America, joined Oct 1999, 996 posts, RR: 14 Reply 5, posted (12 years 2 months 3 weeks 2 days 9 hours ago) and read 762 times:
Wow, I think both of you guys Bobby, B747, are very insightful. Bobby everything you said was right on. I hope our cost structure will help, and our cuts should benefit when recovery comes. And as B747, our debt is a little higher than others, which I think is reflected in the stock price; however, when you look at revenues vs cost right now ( this is my thinking) you've got to be concerned for US, and HP in the near future first. B747, as for this whole uprising about Gordon shoting off his mouth, all I can say is you have to know him. It might hurt our stock for the first few days, but he is leading the way for the industry, not just little CO. I hope he is going to end saving the whole industry, and US commrece with it...