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Peach Corps Gate Agents?

Old 05-25-2020, 07:19 AM
  #111  
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Originally Posted by AUP09 View Post
The money would not have been spent on other things. Buyback or no buyback the money would have been returned to shareholders one way or another.
Yes, but returning the money via buybacks manipulates the value of stock based compensation. Returning the money to shareholders via dividends does not have the same effect.
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Old 05-25-2020, 07:24 AM
  #112  
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Originally Posted by CoefficientX View Post
You’ve said this many times in this thread. Could you explain to us why this money would have only gone to shareholders? You’re making it sound as though allocating the money for other things was not an option.
This money would have only gone to shareholders, because the executives only wanted it to go to shareholders to increase the value of the executives' stock based compensation. It's a way of saying, "management doesn't care about you proles" that assumes you are too ignorant to understand.

If Delta Air Lines had a $20B cash reserve, we would still furlough 2,500 pilots on October 1st, because management does not care about any of us. They only care about turning red boxes green on the excel spreadsheet.
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Old 05-25-2020, 07:29 AM
  #113  
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Originally Posted by notEnuf View Post
What other things? Dividends and buybacks were the vehicles of choice, The theory of stock appreciation with balance sheet improvement is just as valid as the buybacks. We will never know if that money would have served the shareholders better by increasing shareholders equity book value (balance sheet) by reducing debt. That also side steps the real motivation, management compensation.
Agree. Amazon is a perfect case in point. No stock buybacks and all the money is sunk back into the business. Their stock price seems to be doing just fine.

That philosophy however is not what they teach in B-school anymore. Stock buybacks and LBO’s are de riguer. The formula for determining how much money should go to stock buybacks is taught. Now it’s suck out as much money as you can, while you can rather than plow all the money back into the business. I mean, why would you want to plow all your money back into a highly cyclical business like the airlines?? Your opportunity and time to suck money out is limited.

Not to mention all your like-minded buddies are on the board, and yes, 90% of your compensation is stock options. What could go wrong?

When it doesn’t work out - declare bankruptcy.
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Old 05-25-2020, 08:07 AM
  #114  
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Originally Posted by CoefficientX View Post
You’ve said this many times in this thread. Could you explain to us why this money would have only gone to shareholders? You’re making it sound as though allocating the money for other things was not an option.
Yes, it's actually really simple. It all goes back to the basic framework we have for distribution of operating cash: 50% of operating cash flow goes back into the business, 30% goes to debt reduction, and 20% to shareholders.
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Old 05-25-2020, 09:11 AM
  #115  
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Originally Posted by Tummy View Post
This money would have only gone to shareholders, because the executives only wanted it to go to shareholders to increase the value of the executives' stock based compensation.
^^^This is it. And that's all it is.

In this extremely cyclical industry the braintrust has, once again, lit billions on fire only to go hat in hand to the taxpayers to get billions in handouts, so they can try and return to lighting billions on fire. Bonus points to those using US taxpayer money to buy Airbus planes. Truly B-School brilliance. And they still think the multibillion dollar burnbacks are going to return along with the next temporary upswing.
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Old 05-25-2020, 11:01 AM
  #116  
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Originally Posted by AUP09 View Post
Yes, it's actually really simple. It all goes back to the basic framework we have for distribution of operating cash: 50% of operating cash flow goes back into the business, 30% goes to debt reduction, and 20% to shareholders.
Then the framework needs to be changed......

Denny
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Old 05-25-2020, 04:21 PM
  #117  
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Originally Posted by Denny Crane View Post
Then the framework needs to be changed......



Denny
It will change now that there is a mountain of debt to work down once again. Amount of cash on hand will also likely change going forward now that there is a new precedent.
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Old 05-25-2020, 04:45 PM
  #118  
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Originally Posted by AUP09 View Post
It will change now that there is a mountain of debt to work down once again. Amount of cash on hand will also likely change going forward now that there is a new precedent.
As it should. Change that is....

I think that’s been the point of a lot of posters. As I’m sure you can gather, the vast majority of pilots look at stock buybacks as way for management to enrich themselves under the guise of returning shareholder value. Right or wrong, that’s the impression.

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Old 05-25-2020, 07:05 PM
  #119  
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Originally Posted by Denny Crane View Post
As it should. Change that is....

I think that’s been the point of a lot of posters. As I’m sure you can gather, the vast majority of pilots look at stock buybacks as way for management to enrich themselves under the guise of returning shareholder value. Right or wrong, that’s the impression.

Denny
So have you also noticed that AUP09 never seems to address the point that stock buybacks are aligned to enrich management more so than other investor return methods. I appreciate the calm demeanor and actually answering questions which is refreshing.
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