Originally Posted by Drum

Actually my friend issuing stock is absolutely a way to help with cash flow. The only case it generally doesn't is stock splits. We are nowhere near that territory.

Look at any cash flow statement you will see a line for "issuance of common stock" or the like. It is most definitely a way to increase cash flow.
and I apologize for the cash flow thing, I thought that was directed at me....

Originally Posted by ChazzMMichaels

No worries!



Granted my MBA is about 12 years old, and even then I checked my work with google/investopedia/whatever, but there's a difference between operating cash flow and the cash flow from investments and financing. I was suggesting that the cash flow that mgmt is talking about is specifically operating cash flow, basically the daily revenue/expenses directly tied to flying airplanes. I'm thinking that is typically what execs are referring to when they say "cash flow" in this respect. But I very well could be wrong.

Originally Posted by AUP09

Becoming cash positive is the trigger. Once we are cash positive we can switch to recovery mode.

The data we have shows there is no swelling. Are there problems? Yes. Are they widespread and affecting thousands or tens of thousands of customers? No. Customer service ratings are currently at historical highs.

I understand what you are seeing in your state. I see it in my state as well but currently everyone appears to me "moving on" on the ground and not in the air.

Bookings are up from the lows but still negative. Bookings have flirted with being positive for a few days recently. Raising equity would not help our cash negative problem, it would just allow us to last longer in a negative cash situation. We have no reason to raise equity when the debt markets are still open to us.

Being #1 in size has actually never been discussed. We would rather be #1 in several key financial and customer metrics. If being #1 in the financial/customer metrics eventually makes us #1 in size then so be it, but it's not an explicit goal. And, no one has said we don't have a couple of potential "bold moves" being analyzed.

The qualitative analysis is used to supplement the quantitative data it doesn't override it. It's not like bookings are maxed out and the qualitative analysis says, "well, Disney Land isn't open so let's ignore all this booking activity and keep things as is."

The "FUD" is not faked, it's very real.

Originally Posted by Drum

Do you regret stock buybacks and will they be a continuance in the status quo of DAL in the future?



What's your plan for Disney Opening next month? The orlando theme parks are all following.



We've seen the FUD before. Nothing new. I expect you will deal with your lines of available credit to include uncle sugar, as if it is going to be as bad as you say, the .gov won't let their airlines perish. Who will be left to fill the void?

Originally Posted by AUP09

No regrets on buybacks. The cash would not be available to us today even if it was not used to buy back stock. Will there be buy backs in the future? Probably, but it will be long after the company is very profitable again.

Summer schedules are being adjusted every day. Mostly adding capacity but there are cuts too.

If it comes to it, they may let a few.

Originally Posted by 20Fathoms

I appreciate the candor as that’s not a popular position to take around here. Maybe Chazz can find the “No Regerts” meme But as long as you’re engaging (in a decently productive way I might add) with the peasants, do you mind explaining why the cash would not be available? I believe even American had more cash on hand than we did when the hammer fell.....

Originally Posted by AUP09

50% of operating cash flow goes back into the business, 30% goes to debt reduction, and 20% to shareholders.

Originally Posted by AUP09

There are three methods for returning money to shareholders: dividends, price appreciation, and stock buy backs. Investors typically prefer buy back programs because it gives them a choice. If they don't participate they can defer and possibly reduce taxes and let their stock continue to appreciate. If they do participate they can cash out at a price they desire.

Originally Posted by AUP09

Buy backs create tax benefits, increase share prices, and increase shareholder value (EPS).

Originally Posted by TED74

This was management's aim. Clearly in hindsight, this is not how things shook out. Having borrowed to buyback, the debt reduction piece was essentially washed out. Shareholders who saw their value plummet 65% have of course lost money.









You've lost me here, although there are a lot of relevant buzz words in there. How does an investor "participate" in a buyback program...and how does that "participation" differ from any other day of the week when they are free to buy/sell at their whim? I see no additional choices made available by buybacks. Sure, the announcement of a buyback creates a decision point, but so does any other announcement (like LATAM deal, aircraft acquisition, etc.).









How does a buyback deal improve an investor's tax situation any differently than any other time they invest in or sell shares of a publicly traded company?



The jury is still out if buybacks meaningfully increase share prices, particularly over the long term. Many studies suggest otherwise, since companies typically do this when prices are already elevated. If ever there were a good time to buyback stock, it was when ours was at $19...but of course we couldn't do that.



EPS is not value...it is a measurement. Buybacks boost a measurement of value, but they don't actually add much other than boosting the dividend. If one truly wants to increase value for shareholders, boosting the dividend directly is the most efficient way to do so. Unfortunately for all of us, executive compensation doesn't revolve around dividends.



I was pleasantly surprised how far EB went to acknowledge that buybacks are unhealthy in the long run during the townhall. Of course he didn't say those words, but he got pretty close. It's okay to rethink mistakes made in the past. The buybacks are clearly something we would undo if we could go back in time...so why are folks still singing their praises - particularly in this capital-intensive industry?



Since we pilots are wed to this company for decades, it behooves us to have a long-range visionary team at the helm. I was glad to hear Ed speak to the too-fast, short-range lever pulling that exacerbated our predicament. Hopefully some lessons learned will truly affect our behavior going forward... even after governmental restrictions (re: buybacks and executive comp) expire.

Originally Posted by AUP09

It is how things shook out at the time. We temporarily borrowed to buy back shares at a low price point. The debts were repaid. There are no long term loans for share buy backs. Stock price now is irrelevant.

The participation occurs by the holder choosing to sell the shares.

There will always be a relative increase in share price through a buy back long term. Even if the price falls over the long term it would have fallen more if there were more shares outstanding.

Yes, EPS is a metric, but it's the primary way shareholder value is calculated. Dividends augment shareholder value. Over the long term, buy backs will create more shareholder value if returns are above a certain calculated %, if they fall below that % then only paying out dividends would have created more shareholder value.

I wouldn't say that's exactly how EB phrased it. He was basically saying that we won't be buying back stocks in the near future because we have to get our debt situation under control again just as we did coming out of bankruptcy. When debt levels are normalized and the company is constantly profitable again don't be surprised if buybacks resume.

We were growing too fast and there are many that acknowledged that long before the pandemic. Going forward things may be different.