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Opportunity Cost - AA vs UAL?

Old 07-08-2019, 09:00 PM
  #41  
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Originally Posted by FlyPurdue View Post
I don’t mean that they will be making more than 5% in annual interest, I'm simply saying that >5% is a hurdle rate for any capital expenditure.

Thanks for pointing me to the 10-q, although I spent 5 years in planning at AA; revenue management and fleet planning. Treasury/Capital Planning, was not my area of expertise. Doug reiterates on every investor call that AA has a liquidity of $7B, and I took that at face value - I was wrong.
Our margin is 3%, meaning we are borrowing at 5%+ to earn 3%.

That would be like taking out a 5% mortgage while having the cash in the bank earning 3%, and leveraging up to the hilt.

It's the opposite of using OPM and no one ever got rich doing it that way.

If you could borrow at 5% but earn 10%+ using that money, you'd borrow as much as you could, right?

The issue with AA right now (and probably forever) is there is limited amounts we can grow our core business. AA so far has not taken on risk to grow their businesses outside of a standard 2%-3% per year. They are laser focused on just transporting passengers.

As a stockholder what you want to see is a company that can continue growing...it's what you pay the leadership for and why you own stock. AA is not exciting and has little to no growth in it, hence the low multiple on the stock.
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Old 07-08-2019, 11:41 PM
  #42  
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Originally Posted by Name User View Post
...
As a stockholder what you want to see is a company that can continue growing...it's what you pay the leadership for and why you own stock. AA is not exciting and has little to no growth in it, hence the low multiple on the stock.
As a passenger, I want a reliable product that has at least some amenities. AA isn’t delivering on that either with arbitrarily cancelled flights, random delays, no power ports on some main cabin extra flights, FAs hoarding bin space above the bulkhead.

I have and will continue to pay cash out of my pocket not to ride on deadheads scheduled on AA anymore, because I want to get there on time and be able to at least charge a phone or laptop. I’m not the only one either.
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Old 07-09-2019, 03:32 AM
  #43  
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Originally Posted by mainlineAF View Post
Wut? AA has replaced a much higher percentage of their fleet in recent years compared to UA/DL. That is the main reason for the debt load.
That’s incorrect. Take a good look at the annual reports. Delta by the way is taking 80 new aircraft a year without any significant increase in debt.
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Old 07-09-2019, 04:16 AM
  #44  
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Originally Posted by sailingfun View Post
That’s incorrect. Take a good look at the annual reports. Delta by the way is taking 80 new aircraft a year without any significant increase in debt.
Do you agree that Delta has a significantly older fleet than American?

And with retirement of the Mad Dog (as well as some other older aircraft in the next few years), the American fleet will become younger on average (or at least hold its own as time marches on)?
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Old 07-09-2019, 06:24 AM
  #45  
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Originally Posted by TransWorld View Post
Do you agree that Delta has a significantly older fleet than American?



And with retirement of the Mad Dog (as well as some other older aircraft in the next few years), the American fleet will become younger on average (or at least hold its own as time marches on)?


American already has the youngest fleet of the 3 legacies.
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Old 07-09-2019, 06:40 AM
  #46  
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Originally Posted by sailingfun View Post
That’s incorrect. Take a good look at the annual reports. Delta by the way is taking 80 new aircraft a year without any significant increase in debt.
AA had about 500 aircraft ordered, the bulk delivered in three years. There was a time we were getting a new airplane a day.

With a fleet of 1000, you need to replace 50 a year anyway due to reaching 20 years of service.
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Old 07-09-2019, 06:42 AM
  #47  
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Originally Posted by TransWorld View Post
Do you agree that Delta has a significantly older fleet than American?

And with retirement of the Mad Dog (as well as some other older aircraft in the next few years), the American fleet will become younger on average (or at least hold its own as time marches on)?
That's nice except Delta spends hundreds of millions less a year on maintenance and we continue to burn more gas YOY. So far, we haven't seen a benefit from spending all that capital. Plus Delta has almost zero maintenance cancels.
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Old 07-09-2019, 06:43 AM
  #48  
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Originally Posted by iHateAMR View Post
As a passenger, I want a reliable product that has at least some amenities. AA isn’t delivering on that either with arbitrarily cancelled flights, random delays, no power ports on some main cabin extra flights, FAs hoarding bin space above the bulkhead.

I have and will continue to pay cash out of my pocket not to ride on deadheads scheduled on AA anymore, because I want to get there on time and be able to at least charge a phone or laptop. I’m not the only one either.
You seriously buy tickets on other carriers vs DHing? Wow. You're something special.
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Old 07-09-2019, 09:05 AM
  #49  
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Originally Posted by Name User View Post
You seriously buy tickets on other carriers vs DHing? Wow. You're something special.
He’s at purple. He gets a choice in deadheads and then comes on here to comment.
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Old 07-09-2019, 09:11 AM
  #50  
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At the end of this guy’s career AA, UAL or DL could be out of business. I’d go for seniority.
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