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Flybird
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AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 12:56 pm

Revenue climbed 3% YoY to $10.94 billion.
Q4 pre-tax profit of $387 million, or $634 million excluding net special items. 2018 pre-tax profit of $1.9 billion, or $2.8 billion excluding net special items.
Q4 Adj. earnings of $1.04 per share, higher than $0.93 per share in the year-ago period and above analysts’ forecast.
Returned $986 million to shareholders in the form of dividends and share repurchases in 2018.
Accrued $175 million for the company’s profit sharing program in 2018, including $40 million in the fourth quarter.
Q4 operating expenses were $10.4 billion, up 4.2% yoy, driven by a 19.6% increase in consolidated fuel expense.


https://news.alphastreet.com/american-a ... -earnings/
 
flyguy84
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 1:35 pm

Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.
SFO
 
musman9853
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 1:39 pm

Glad to see AA doing well
Welcome to the City Beautiful.
 
Someone83
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 1:40 pm

Anything on fleet plans for 2019?
 
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TheLunchbox
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 1:42 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.


Wait until you see JetBlue's.
 
RicFlyer
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 1:43 pm

 
MIflyer12
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 1:52 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.


Owners invest their money. Employees get paid for their labor.
 
B757capt
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 2:01 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.

Slap to the employees as they are paid the highest wages in the world? Come on....... Could it be higher, sure it could, but so could their operations performance......
The views written by this user are in no manner the views of my employer and should not be thought as such.
 
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TVNWZ
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 2:07 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.

Buy stock then.
 
TropicalSky
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 2:12 pm

So how does AA earnings compared to UAL & DAL
 
tphuang
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 2:16 pm

I'm not sure how this is a good earnings.
Their RASM growth in Q4 was the lowest among all the major airlines. They are guidance is flat to 2% increase in RASM for Q1, which is average and lower than what UA and WN reported. They are expecting Q1 margin to be 2.5 to 4.5%, which will be probably the worst amongst all airlines.

Their pre-tax non-GAAP margin is 5.8%, which is probably going to be the worst among all the major airlines.
 
flyguy84
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 2:28 pm

tphuang wrote:
I'm not sure how this is a good earnings.
Their RASM growth in Q4 was the lowest among all the major airlines. They are guidance is flat to 2% increase in RASM for Q1, which is average and lower than what UA and WN reported. They are expecting Q1 margin to be 2.5 to 4.5%, which will be probably the worst amongst all airlines.

Their pre-tax non-GAAP margin is 5.8%, which is probably going to be the worst among all the major airlines.

Agreed. Lackluster at best. There are a lot of headwinds for AA.... the cheapening of their product isn’t doing them any favors.
SFO
 
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SteveXC500
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 2:31 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.


No company is REQUIRED to pay profit sharing. It's a mechanism using total compensation to keep talented individuals engaged and employed. How many employees are getting the $175MM and what is the average rate paid to the employees? That would be a good question to figure out. Total compensation would also include the benefits of flying for next to nothing...seems they also awarded ALL employees another $1,000 at the beginning of the year from the Tax Cut in 2017.

Additionally, the release states some of the $986MM paid to shareholders was in the form of share repurchase. This is meant to manage the balance sheet in the way the company sees fit. It's like equity redemption. The release does not break out the actual cash dividend from the share repurchase, though it does state $.10/share.

So, I don't agree this is a "slap" to employees.
 
Lpbri
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 3:10 pm

Compare AAs profit sharing to other major airlines........
 
VS11
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 3:13 pm

Despite paying down $1.332 billion of debt in the past year, they still carry tons of debt at $21.179 billion.
 
wenders825
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 3:15 pm

AA doesn't have profit sharing in any of their labor contracts, but other airlines do. wait until the next contracts and we'll see then
 
727LOVER
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 3:16 pm

RicFlyer wrote:



Confirmation that the A333 will be around for a while


219 A321?....WOW....how many of those were LUS?
Last edited by 727LOVER on Thu Jan 24, 2019 3:18 pm, edited 1 time in total.
"We must accept finite disappointment, but never lose infinite hope." - Martin Luther King, Jr.
 
FlyPNS1
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 3:17 pm

RicFlyer wrote:


I'm kind of surprised that AA is allowing the mainline fleet to keep shrinking. Seems counter to DL/UA/WN that are growing their fleets.
 
PHLspecial
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 3:41 pm

RicFlyer wrote:


It seems like the A333 will be staying to 2023, well we at least know they will be here until the end of 2021. Shame AA didn't update the A333 with cabin refresh. I'm curious to know where the A321neo will go in 2020, I know the first 17 will be based in LAX and PHX I think.
 
cledaybuck
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 3:47 pm

FlyPNS1 wrote:
RicFlyer wrote:


I'm kind of surprised that AA is allowing the mainline fleet to keep shrinking. Seems counter to DL/UA/WN that are growing their fleets.
It looks pretty flat to me. Down 9 planes this year, but back to the exact same number at year end 2020.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
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lightsaber
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:05 pm

VS11 wrote:
Despite paying down $1.332 billion of debt in the past year, they still carry tons of debt at $21.179 billion.

They should have bought less stick and paid down more debt. The era if free debt is ending. Interest rates will go up.

This wasn't a bad report, but I'm not impressed. I like flying AA, but they need to figure out what DL does better and impliment it!

Lightsaber
Winter is coming.
 
MSPNWA
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:14 pm

Still could be better, but there is light at the end of the tunnel. On the revenue side their load factors aren't impressive. a bump there would do wonders. On the cost side, it's one more year of pain, then it eases up for the long-haul.

VS11 wrote:
Despite paying down $1.332 billion of debt in the past year, they still carry tons of debt at $21.179 billion.


Positive news thoguh that they paid off that much. They released their CapEx projections for the next couple years. They fall of a cliff after this year. AA is in good shape long-term on the cost side.

Airlines that paid down debt in a cheap debt environment instead of refreshing their fleets are the airlines that should be concerned.
 
YouGeeElWhy
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:16 pm

AA loses money flying people (RASM < CASM) but makes money with its reward/credit card program. AA also keeps "enhancing" their reward program, which seems like faulty logic knowing that their profit is coming from said program.
 
n797mx
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:42 pm

RicFlyer wrote:


Anyone have an actual date/flight for MD-80 retirement? I know it's planned for September, but not the actual date. I'd love to get on it.
Clear skies and strong tail winds.
 
ScottB
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:46 pm

lightsaber wrote:
This wasn't a bad report, but I'm not impressed.


Given the economic environment, it's a bad report. LUV reported today and they had over double the pre-tax income ($817 million) on just over half the revenue ($5.70 billion) for the quarter. AAL's operating margin was 5.0% in a period of robust economic growth while LUV posted 14.4% and DAL reported 10.1%. It is embarrassing and the shareholders and board should be asking why management is failing to keep up with the company's peers.

Flybird wrote:
Accrued $175 million for the company’s profit sharing program in 2018, including $40 million in the fourth quarter.


Delta paid out nearly twice that ($311 million) in the fourth quarter alone.

SteveXC500 wrote:
Additionally, the release states some of the $986MM paid to shareholders was in the form of share repurchase. This is meant to manage the balance sheet in the way the company sees fit. It's like equity redemption. The release does not break out the actual cash dividend from the share repurchase, though it does state $.10/share.


The company is still sitting on a crapton of debt and rates are rising. They need to pay down that debt rather than try to boost executive bonuses by propping up the share price.
 
Brickell305
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:50 pm

For years, we've been told that the cheapening of the product for legacy airlines has no negative impacts on financial performance. We've been led to believe the opposite actually, that by constantly cheapening the product, it would allow legacies to compete on price which apparently is all anyone ever cares about. Are we finally seeing the reverse with AA where it's cheapened product is hurting it relative to its legacy peers?
 
winginit
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:51 pm

MSPNWA wrote:
Airlines that paid down debt in a cheap debt environment instead of refreshing their fleets are the airlines that should be concerned.


I'm struggling to put my finger on a single major airline who hasn't meaningfully refreshed their fleet in the past couple of years.

Additionally, hard to envision why any major US airline in this post-consolidation era shy of maybe B6 should be legitimately 'concerned' about just about anything besides possible macro-economic headwinds impacting demand that can be strategized around.
 
HPAEAA
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 4:58 pm

Brickell305 wrote:
For years, we've been told that the cheapening of the product for legacy airlines has no negative impacts on financial performance. We've been led to believe the opposite actually, that by constantly cheapening the product, it would allow legacies to compete on price which apparently is all anyone ever cares about. Are we finally seeing the reverse with AA where it's cheapened product is hurting it relative to its legacy peers?

Not according to the execs on the call today...

anyone know what they mean about selling basic economy further up the fare ladder? Does that mean even on close in tickets they’re going to offer it for expensive fares?
1.4mm and counting...
 
MSPNWA
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:17 pm

winginit wrote:
I'm struggling to put my finger on a single major airline who hasn't meaningfully refreshed their fleet in the past couple of years.

Additionally, hard to envision why any major US airline in this post-consolidation era shy of maybe B6 should be legitimately 'concerned' about just about anything besides possible macro-economic headwinds impacting demand that can be strategized around.


DL and UA are in that boat. Even WN to a small extent. DL though in particular. They're just starting ten years of high CapEx and fleet turnover. UA can put it off for a few years, but in 5-10 years they will staring at a mound of fleet renewal as the large portion of their fleet built in the 90s and early 00s needs retirement.

When you kick the can down the road, you had better hope that can doesn't bounce back up when you can't chew it. AA has taken the pain now when they can chew it, and their reward is that they can afford to control their spending down the road. DL doesn't have luxury, and UA won't if they don't get on it soon.
 
airzona11
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:19 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.


And jobs... And shareholders are also employees.
 
winginit
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:19 pm

HPAEAA wrote:
Brickell305 wrote:
For years, we've been told that the cheapening of the product for legacy airlines has no negative impacts on financial performance. We've been led to believe the opposite actually, that by constantly cheapening the product, it would allow legacies to compete on price which apparently is all anyone ever cares about. Are we finally seeing the reverse with AA where it's cheapened product is hurting it relative to its legacy peers?

Not according to the execs on the call today...

anyone know what they mean about selling basic economy further up the fare ladder? Does that mean even on close in tickets they’re going to offer it for expensive fares?


Yes you're correct.

My understanding is that as opposed to having a dedicated Basic Economy inventory class like some airlines, AA utilizes a character within the Fare Basis Code that marks and sells a fare class as Basic Economy. What this allows AA to do that having a dedicated RBD doesn't do is 'mark' fares higher up the ladder, theoretically all the way up to Y, B H, etc. as 'basic economy'.

In practice, even if lower inventories are closed, AA is saying that they could sell a more expensive B or H or what have you economy fare as basic economy, so you could buy something close in that doesn't allow carry-ons or whatever it is that AA unbundles from basic economy fares. Yuck.
 
ckfred
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:23 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.


The board of directors and senior officers of a company have fiduciary duties to the shareholders. The only duty between an employer and an employee is contractual, along with any requirements imposed by government.

While there are enlightened shareholders who believe that a company performs better, when employees are treated well and fairly compensated, a lot of mutual funds, private-equity firms, and people like Carl Icahn and Norman Peltz simply look at what the company is doing for the benefit of the shareholders in terms of increasing the stock price and dividends. This is why some large companies never go public. Then they don't have to worry about meeting earnings forecasts.

As for the amount of debt that AAG is carrying, how much of that is at set interest rates? If the majority of the debt is in bonds with interest rates that were fixed before the Fed started raising rates, then there isn't a lot to be worried about, other than the amount of outstanding principal. If a lot of the debt is lines of credit with variable interest rates, then there is a greater cause for concern.
 
TWFlyGuy
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:24 pm

Sort of disappointing especially if we are moving closer to a slowing economy. Will be interesting to see 1Q19 as I have to imagine AA's DCA presence generates significant gov't business. The slowdown could be an additional pinch AA doesn't need. Overall, continued subpar performance compared to peers has to put some pressure on Parker at some point. Surprised we aren't seeing it yet.
 
HPAEAA
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:33 pm

winginit wrote:
HPAEAA wrote:
Not according to the execs on the call today...

anyone know what they mean about selling basic economy further up the fare ladder? Does that mean even on close in tickets they’re going to offer it for expensive fares?


Yes you're correct.

My understanding is that as opposed to having a dedicated Basic Economy inventory class like some airlines, AA utilizes a character within the Fare Basis Code that marks and sells a fare class as Basic Economy. What this allows AA to do that having a dedicated RBD doesn't do is 'mark' fares higher up the ladder, theoretically all the way up to Y, B H, etc. as 'basic economy'.

In practice, even if lower inventories are closed, AA is saying that they could sell a more expensive B or H or what have you economy fare as basic economy, so you could buy something close in that doesn't allow carry-ons or whatever it is that AA unbundles from basic economy fares. Yuck.

Gotcha, that makes sense....so basically it’s their way of backing in a 25 dollar fare hike on 60% of customers (numbers were discussed on the call). Agreed, yuck and it really seems to go against what they said it was going to be from a product standpoint.

MSPNWA wrote:
winginit wrote:
I'm struggling to put my finger on a single major airline who hasn't meaningfully refreshed their fleet in the past couple of years.

Additionally, hard to envision why any major US airline in this post-consolidation era shy of maybe B6 should be legitimately 'concerned' about just about anything besides possible macro-economic headwinds impacting demand that can be strategized around.


DL and UA are in that boat. Even WN to a small extent. DL though in particular. They're just starting ten years of high CapEx and fleet turnover. UA can put it off for a few years, but in 5-10 years they will staring at a mound of fleet renewal as the large portion of their fleet built in the 90s and early 00s needs retirement.

When you kick the can down the road, you had better hope that can doesn't bounce back up when you can't chew it. AA has taken the pain now when they can chew it, and their reward is that they can afford to control their spending down the road. DL doesn't have luxury, and UA won't if they don't get on it soon.

Agreed, the one thing WN has continually done & DL seems to be starting to do & UA has the option to do is to spread out all the capex over a longer period of time, rather than trying to replace over 2/3 the fleet in 5-8 years like AA did causing a huge bubble of spending, other carriers can spread that out over 10-20 years allowing a more consistent investment cycle & lower over all costs. On the plus side it gives them flexibility to hang on to older aircraft during the peaks of the economic cycle & Park them during the troughs.... AA unfortunately had kicked the can for almost 15 years due to its financial condition & had to go big....
1.4mm and counting...
 
winginit
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:34 pm

MSPNWA wrote:
winginit wrote:
I'm struggling to put my finger on a single major airline who hasn't meaningfully refreshed their fleet in the past couple of years.

Additionally, hard to envision why any major US airline in this post-consolidation era shy of maybe B6 should be legitimately 'concerned' about just about anything besides possible macro-economic headwinds impacting demand that can be strategized around.


DL and UA are in that boat. Even WN to a small extent. DL though in particular. They're just starting ten years of high CapEx and fleet turnover. UA can put it off for a few years, but in 5-10 years they will staring at a mound of fleet renewal as the large portion of their fleet built in the 90s and early 00s needs retirement.

When you kick the can down the road, you had better hope that can doesn't bounce back up when you can't chew it. AA has taken the pain now when they can chew it, and their reward is that they can afford to control their spending down the road. DL doesn't have luxury, and UA won't if they don't get on it soon.


So state your hypothesis then. Is it that, in five or ten years, DL and UA having kicked the fleet renewal can down the road a bit combined with more expensive debt will result in AA having a healthier balance sheet compared to their primary competitors?
 
OB1504
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:39 pm

winginit wrote:
HPAEAA wrote:
Brickell305 wrote:
For years, we've been told that the cheapening of the product for legacy airlines has no negative impacts on financial performance. We've been led to believe the opposite actually, that by constantly cheapening the product, it would allow legacies to compete on price which apparently is all anyone ever cares about. Are we finally seeing the reverse with AA where it's cheapened product is hurting it relative to its legacy peers?

Not according to the execs on the call today...

anyone know what they mean about selling basic economy further up the fare ladder? Does that mean even on close in tickets they’re going to offer it for expensive fares?


Yes you're correct.

My understanding is that as opposed to having a dedicated Basic Economy inventory class like some airlines, AA utilizes a character within the Fare Basis Code that marks and sells a fare class as Basic Economy. What this allows AA to do that having a dedicated RBD doesn't do is 'mark' fares higher up the ladder, theoretically all the way up to Y, B H, etc. as 'basic economy'.

In practice, even if lower inventories are closed, AA is saying that they could sell a more expensive B or H or what have you economy fare as basic economy, so you could buy something close in that doesn't allow carry-ons or whatever it is that AA unbundles from basic economy fares. Yuck.


Basic economy fare basis codes are basically modified regular economy codes, but AA does have basic economy as its own inventory. B is basic economy on AA.
 
winginit
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:42 pm

OB1504 wrote:
winginit wrote:
HPAEAA wrote:
Not according to the execs on the call today...

anyone know what they mean about selling basic economy further up the fare ladder? Does that mean even on close in tickets they’re going to offer it for expensive fares?


Yes you're correct.

My understanding is that as opposed to having a dedicated Basic Economy inventory class like some airlines, AA utilizes a character within the Fare Basis Code that marks and sells a fare class as Basic Economy. What this allows AA to do that having a dedicated RBD doesn't do is 'mark' fares higher up the ladder, theoretically all the way up to Y, B H, etc. as 'basic economy'.

In practice, even if lower inventories are closed, AA is saying that they could sell a more expensive B or H or what have you economy fare as basic economy, so you could buy something close in that doesn't allow carry-ons or whatever it is that AA unbundles from basic economy fares. Yuck.


Basic economy fare basis codes are basically modified regular economy codes, but AA does have basic economy as its own inventory. B is basic economy on AA.


Ah. Thank you for that clarification. Is the stated hypothetical more or less correct to your knowledge then? Even with a dedicated B RBD for Basic Economy AA can and seemingly intends to offer Basic Economy products up the ladder within higher economy inventories?
 
Boof02671
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:48 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.

And still negotiating JCBAs with maintenance and ramp for the past four years and are asking for concessions
 
Bobloblaw
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 5:58 pm

flyguy84 wrote:
Slap in the face to employees. Almost one billion returned to the shareholders while employees get a measly 175 million in profit sharing.

There's a lot more shareholders than employees. I highly doubt on a per person benefit, employees are getting less. AA has a dividend yield of 1.2%
 
Bobloblaw
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 6:02 pm

VS11 wrote:
Despite paying down $1.332 billion of debt in the past year, they still carry tons of debt at $21.179 billion.

AA I think bet the wrong way back in 2012. They took out a lot of debt to buy fuel efficient aircraft, betting oil stays at $100 and interest rates at 0-1%. The exact opposite happened.
 
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SteveXC500
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 6:03 pm

SteveXC500 wrote:
Additionally, the release states some of the $986MM paid to shareholders was in the form of share repurchase. This is meant to manage the balance sheet in the way the company sees fit. It's like equity redemption. The release does not break out the actual cash dividend from the share repurchase, though it does state $.10/share.


The company is still sitting on a crapton of debt and rates are rising. They need to pay down that debt rather than try to boost executive bonuses by propping up the share price.[/quote]

Clearly, Management and the BOD disagree.
 
bigjku
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 6:14 pm

SteveXC500 wrote:
SteveXC500 wrote:
Additionally, the release states some of the $986MM paid to shareholders was in the form of share repurchase. This is meant to manage the balance sheet in the way the company sees fit. It's like equity redemption. The release does not break out the actual cash dividend from the share repurchase, though it does state $.10/share.


The company is still sitting on a crapton of debt and rates are rising. They need to pay down that debt rather than try to boost executive bonuses by propping up the share price.


Clearly, Management and the BOD disagree.[/quote]

It depends on the nature of the debt. If it’s debt they can pay off as it comes do without refinancing and it’s fixed rate rising rates don’t much matter. I suspect the majority of their debt is in the form of bonds or installment debt on aircraft. It is likely fixed rate (probably in their disclosures) and if that is the case they don’t have rate risk so long as they can retire the debt on schedule.
 
jbs2886
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 6:50 pm

cledaybuck wrote:
FlyPNS1 wrote:
RicFlyer wrote:


I'm kind of surprised that AA is allowing the mainline fleet to keep shrinking. Seems counter to DL/UA/WN that are growing their fleets.
It looks pretty flat to me. Down 9 planes this year, but back to the exact same number at year end 2020.


Right, the "shrinking" has stopped. But take into consideration those 30 MD80s aren't flying all day and are replaced by aircraft that will fly all day. There is a lot of upgauging as well.
 
majano
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Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 8:50 pm

TropicalSky wrote:
So how does AA earnings compared to UAL & DAL

I prepared a table comparing DL and UA's 2018 full year results in a separate thread, I have updated it below to include AA and show the data as reported.

Key Financial Results-------------------------Delta--------------------United--------------------American

Total Revenue ($Million)-------------------44,438------------------41,303----------------------44,541
Operating Margin-----------------------------11.84%-----------------8.00%------------------------6.34%
Net Profit After Tax---------------------------3,935-------------------2,129--------------------------1,412

Key Operations Statistics
Yield (Cents)------------------------------------17.65-------------------16.38-----------------------17.60
TRASM (Cents)--------------------------------16.87-------------------15.00-----------------------15.79
Load Factor-------------------------------------85.5%------------------83.4%-----------------------82.0%

The numbers seem to suggest that whilst AA is competitive at the revenue level (yield and TRASM), their operating margin is very low. It is therefore the expenses that dragged them down in 2018.
 
cledaybuck
Posts: 1740
Joined: Thu Aug 18, 2016 6:07 pm

Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 9:14 pm

majano wrote:
TropicalSky wrote:
So how does AA earnings compared to UAL & DAL

I prepared a table comparing DL and UA's 2018 full year results in a separate thread, I have updated it below to include AA and show the data as reported.

Key Financial Results-------------------------Delta--------------------United--------------------American

Total Revenue ($Million)-------------------44,438------------------41,303----------------------44,541
Operating Margin-----------------------------11.84%-----------------8.00%------------------------6.34%
Net Profit After Tax---------------------------3,935-------------------2,129--------------------------1,412

Key Operations Statistics
Yield (Cents)------------------------------------17.65-------------------16.38-----------------------17.60
TRASM (Cents)--------------------------------16.87-------------------15.00-----------------------15.79
Load Factor-------------------------------------85.5%------------------83.4%-----------------------82.0%

The numbers seem to suggest that whilst AA is competitive at the revenue level (yield and TRASM), their operating margin is very low. It is therefore the expenses that dragged them down in 2018.
3.5% higher load factor seems pretty significant.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
Sydscott
Posts: 3513
Joined: Thu Oct 30, 2003 11:50 am

Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 9:34 pm

cledaybuck wrote:
FlyPNS1 wrote:
RicFlyer wrote:


I'm kind of surprised that AA is allowing the mainline fleet to keep shrinking. Seems counter to DL/UA/WN that are growing their fleets.
It looks pretty flat to me. Down 9 planes this year, but back to the exact same number at year end 2020.


It'll be interesting to see if AA actually sticks to the retirement schedule especially for the 737-800's. I tend to think that if things remain buoyant they could always push those retirements back and allow the mainline fleet to grow a bit.

More interesting is the regional fleet numbers. Is AA pushing up against the limit on its larger Regional Jets after the little jump in fleet numbers from 2018 to 2019? It seems weird that both mainline and regional fleets would be kept in a holding pattern for years.
 
HPAEAA
Posts: 1142
Joined: Mon May 08, 2006 7:24 am

Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 9:35 pm

majano wrote:
TropicalSky wrote:
So how does AA earnings compared to UAL & DAL

I prepared a table comparing DL and UA's 2018 full year results in a separate thread, I have updated it below to include AA and show the data as reported.

Key Financial Results-------------------------Delta--------------------United--------------------American

Total Revenue ($Million)-------------------44,438------------------41,303----------------------44,541
Operating Margin-----------------------------11.84%-----------------8.00%------------------------6.34%
Net Profit After Tax---------------------------3,935-------------------2,129--------------------------1,412

Key Operations Statistics
Yield (Cents)------------------------------------17.65-------------------16.38-----------------------17.60
TRASM (Cents)--------------------------------16.87-------------------15.00-----------------------15.79
Load Factor-------------------------------------85.5%------------------83.4%-----------------------82.0%

The numbers seem to suggest that whilst AA is competitive at the revenue level (yield and TRASM), their operating margin is very low. It is therefore the expenses that dragged them down in 2018.


First off, thanks for pulling this together!
So yes, it's partly an expense problem but I'd also argue it's a revenue problem - from the top line DLs within 100MM of AA which is a pretty small gap considering AAL operates 230 more aircraft (approximately 17%) larger than Delta Airlines when you include the connection fleets... The 2nd thing that catches my eye is that DL is making approximately 7% (1.08 cents) more for every mile that they fly.. Given how close Delta is getting, I wonder if they have a shot of overtaking AAL as the number one carrier in terms of revenue (yes, ASMs and RSMs are a different story).

Sydscott wrote:
cledaybuck wrote:
FlyPNS1 wrote:

I'm kind of surprised that AA is allowing the mainline fleet to keep shrinking. Seems counter to DL/UA/WN that are growing their fleets.
It looks pretty flat to me. Down 9 planes this year, but back to the exact same number at year end 2020.


It'll be interesting to see if AA actually sticks to the retirement schedule especially for the 737-800's. I tend to think that if things remain buoyant they could always push those retirements back and allow the mainline fleet to grow a bit.

More interesting is the regional fleet numbers. Is AA pushing up against the limit on its larger Regional Jets after the little jump in fleet numbers from 2018 to 2019? It seems weird that both mainline and regional fleets would be kept in a holding pattern for years.

Yes, on the call Management said they were near the limit of the RJ scope, the mentioned changing the mix a bit to larger aircraft, which I believe is the e140 & CRJ drop off.
1.4mm and counting...
 
ScottB
Posts: 7114
Joined: Fri Jul 28, 2000 1:25 am

Re: AA announces upbeat Q4 2018 earnings

Thu Jan 24, 2019 10:03 pm

MSPNWA wrote:
DL and UA are in that boat. Even WN to a small extent. DL though in particular. They're just starting ten years of high CapEx and fleet turnover. UA can put it off for a few years, but in 5-10 years they will staring at a mound of fleet renewal as the large portion of their fleet built in the 90s and early 00s needs retirement.


Except that the work DAL management has done to clean up the balance sheet will help to reduce their borrowing costs going forward; the credit rating agencies have raised Delta's rating to investment grade and that reduces their borrowing costs. Strategic use of the old fleet has also kept DL's cash flow very strong -- enough so that they're able to fund the fleet investments out of cash flow. The impending retirement of the MD-88s doesn't require as much investment in new equipment as one might think given that the MD-88s are relatively lightly-used at this point. And DL is quite a bit ahead of the curve in pivoting away from 50-seat RJs and replacing that capacity with 100-seat aircraft like the 717 and A220.

WN is in great shape with respect to their fleet, actually. They've been buying aircraft for cash for the past three decades and the most pressing retirement (of the 737 Classics) ended in 2017. They're going to start retirement of the -700s but those aircraft still have quite a bit of life should they need to push that out; the oldest is right about 21 years now.

SteveXC500 wrote:
Clearly, Management and the BOD disagree.


If management and the BOD were doing a good job, the numbers wouldn't be the crap they just reported.
 
Justapax
Posts: 73
Joined: Sat Dec 31, 2016 6:31 am

Re: AA announces upbeat Q4 2018 earnings

Fri Jan 25, 2019 1:45 am

Brickell305 wrote:
For years, we've been told that the cheapening of the product for legacy airlines has no negative impacts on financial performance. We've been led to believe the opposite actually, that by constantly cheapening the product, it would allow legacies to compete on price which apparently is all anyone ever cares about. Are we finally seeing the reverse with AA where it's cheapened product is hurting it relative to its legacy peers?


I have read this theory over and over again on A.net. Consumers are just looking for the lowest price. AA is adding seats and cutting services to be able to sell at the lowest price. Brickell305 is correct. It doesn't seem to be working.
 
winginit
Posts: 3049
Joined: Sat Feb 23, 2013 9:23 pm

Re: AA announces upbeat Q4 2018 earnings

Fri Jan 25, 2019 2:29 am

ScottB wrote:
MSPNWA wrote:
DL and UA are in that boat. Even WN to a small extent. DL though in particular. They're just starting ten years of high CapEx and fleet turnover. UA can put it off for a few years, but in 5-10 years they will staring at a mound of fleet renewal as the large portion of their fleet built in the 90s and early 00s needs retirement.


Except that the work DAL management has done to clean up the balance sheet will help to reduce their borrowing costs going forward; the credit rating agencies have raised Delta's rating to investment grade and that reduces their borrowing costs. Strategic use of the old fleet has also kept DL's cash flow very strong -- enough so that they're able to fund the fleet investments out of cash flow. The impending retirement of the MD-88s doesn't require as much investment in new equipment as one might think given that the MD-88s are relatively lightly-used at this point. And DL is quite a bit ahead of the curve in pivoting away from 50-seat RJs and replacing that capacity with 100-seat aircraft like the 717 and A220.


:checkmark: :checkmark: :checkmark:

Yes and yes. There's this assumption whenever it's pointed out that Delta is likely a few years away from a sizeable fleet investment that they'll have to pile on all this expensive debt to do so that will somehow put them in the same debt boat as AA, but the company has positioned themselves to be able to pay for that renewal need with a combination of cash flow and reduced borrowing costs brought about by their superior investment grade. Additionally, the assumption has been made that DL will go out and do what AA did in making massive orders for brand new aircraft even though DL has shown time and time again that they're savvy at placing smaller orders on an as-needed basis while continuing to leverage their pricing power to extract revenue premiums out of older aircraft that are already paid for.

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