dc10s4ever
Posts: 700
Joined: Fri Dec 09, 2005 3:46 am

AA 2Q Loss Predicted

Thu Jun 29, 2006 10:37 pm

I was just watching the local news, as the 2Q is comming to a close, AA is predicted to post close to a 350m loss. Based on the fact oil as been close to mid 70's for most of the 2Q.
 
commavia
Posts: 9741
Joined: Mon Apr 25, 2005 2:30 am

RE: AA 2Q Loss Predicted

Thu Jun 29, 2006 10:43 pm

That's a bit strange, since according to Yahoo! Finance, the concensus analyst estimate of American's earnings this year is about 95 cents per share, or roughly $180M, with estimates ranging from the low end (a $51M profit) to the high end ($237M profit). In addition, Morgan Stanley just recently reitterated that it expects American to be profitable for full-year 2006, which would be fairly difficult without being profitable in the busiest, highest-revenue quarter, the second quarter.
 
worldtraveler
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Joined: Tue Aug 05, 2003 6:18 am

RE: AA 2Q Loss Predicted

Thu Jun 29, 2006 11:27 pm

AA is undoubtedly planning on taking charges of some kind in order to accomplish this. Not sure what AA’s strategy is but they seem very interested in getting their labor costs down further. They may well be moving down the road of taking charge after charge in order to try and convince their unions that they need more cuts.

It should be obvious that no carrier stays at the top of the heap in the airline industry. If one carrier is succeeding, another carrier is certain to come along and copy it. If one carrier is doing poorly and extracting cuts, other carriers jump on the bandwagon in the hopes that one of them will use their new found cost advantage to get a leg up on the competition, only to see everybody else do the same thing.
 
iowaman
Posts: 3878
Joined: Thu May 20, 2004 2:29 am

RE: AA 2Q Loss Predicted

Thu Jun 29, 2006 11:51 pm

Quoting Dc10s4ever (Thread starter):
AA 2Q Loss Predicted

Is this a surprise?
 
dc10s4ever
Posts: 700
Joined: Fri Dec 09, 2005 3:46 am

RE: AA 2Q Loss Predicted

Fri Jun 30, 2006 12:03 am

Quoting WorldTraveler (Reply 2):
AA is undoubtedly planning on taking charges of some kind in order to accomplish this. Not sure what AA’s strategy is but they seem very interested in getting their labor costs down further. They may well be moving down the road of taking charge after charge in order to try and convince their unions that they need more cuts.

This is very true. Now that UA is out of CH11, and NW and DL are currently in and will soon emerge, AA will have THE HIGHEST COST in the industry. AA has no choice but to come back to the tables and ask labor for more pay cuts.
 
LMP737
Posts: 4809
Joined: Wed May 08, 2002 4:06 pm

RE: AA 2Q Loss Predicted

Fri Jun 30, 2006 12:28 am

Quoting Commavia (Reply 1):
That's a bit strange, since according to Yahoo! Finance, the concensus analyst estimate of American's earnings this year is about 95 cents per share, or roughly $180M, with estimates ranging from the low end (a $51M profit) to the high end ($237M profit). In addition, Morgan Stanley just recently reitterated that it expects American to be profitable for full-year 2006, which would be fairly difficult without being profitable in the busiest, highest-revenue quarter, the second quarter.

Not just difficult but almost impossible.

< http://www.forbes.com/2006/06/26/amr...626markets09.html?partner=yahootix >
Never take financial advice from co-workers.
 
ArtieFufkin
Posts: 671
Joined: Wed May 17, 2006 2:26 pm

RE: AA 2Q Loss Predicted

Fri Jun 30, 2006 12:44 am

Well it's pretty obvious this must have to do with charges. Since MS just said AMR's fuel cost estimates were too conservative and raised the profit estimates. And from past experience these consensus estimates are surprisingly accurate.
 
cch362
Posts: 135
Joined: Sun Apr 22, 2001 1:28 am

RE: AA 2Q Loss Predicted

Fri Jun 30, 2006 2:10 am

Quoting Commavia (Reply 1):
In addition, Morgan Stanley just recently reitterated that it expects American to be profitable for full-year 2006, which would be fairly difficult without being profitable in the busiest, highest-revenue quarter, the second quarter.

It's 3Q (Jul-Sep) that is the busiest and most profitable. Expect AMR to turn a profit then, which should (may) offset the losses and make the entire year profitable.
 
jacobin777
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Joined: Sat Sep 11, 2004 6:29 pm

RE: AA 2Q Loss Predicted

Fri Jun 30, 2006 2:10 am

Quoting Dc10s4ever (Thread starter):
Based on the fact oil as been close to mid 70's for most of the 2Q.

IIRC, they have hedged some fuel (if not most) between $60-$65 barrel...if they have, then it won't make a difference in fuel costs if oil goes higher
"Up the Irons!"