full of luv

Again, read this and like everything, what's normal gets taken to extreme, like AA literally borrowing money to buy stock, but when profits are rolling in, does anyone really think a company can just keep like $20B in the bank as cash and not be a target of takeover by hostile forces which ultimately use your own money to fund the takeover?
Companies were also spending billions on new airport facilities, airplanes and significant pay increases over this same period so to claim that the buybacks were done at the expense of properly running a company is slightly disingenuous.

MagooFlew

true, it hasn’t been that long since all the legacies were out to kill each other. Now that this pax airlina has been shaken to the foundation, all bets are off.

SAABoroowski

exactly........ they never learn, or they don’t care because they are never held accountable. Look at the Former Boeing CEO, how much did that POS walk away???

MagooFlew

oh they have learned. It is we who are the fools. Now let’s add the prevalence of high-speed computerized trading to the mix and this “unfortunate” period of volatility turning on every headline begins to look very different as well.

BMEP100

Understood, which is why your office is shared, dirty, and those executive lunches you enjoy are on your lap, with plastic drinking containers, or sippy cups and no wine....as opposed to those who have been making theses kinds of risk management plans for decades.

bifff15

Wow! Great read!

Itsajob

We’re all in survival mode right now. As soon as the recovery starts we will all be trying to kill each other again and trying to use other airline’s weakness to our advantage. This is a brutal business with thin margins.

fasteddie800

Understood that having a huge cash pile comes with it's own issues.

However, UA had 8.7 Billion in stock buybacks over the past six years. I'm not a finance expert, but couldn't that capital been better utilized elsewhere? If not just sitting in the bank, how about paying off aircraft? Or changing aircraft leases to outright purchases?

Itsajob

The name of the game is maximizing shareholder wealth, not making sound long term business decisions.

full of luv

I'm not qualified as a CFO, but many of the buy/lease/own decisions are based by tax laws that (at different times) tend to favor one or the other.
When Delta went BK back in 2005, some of the largest "creditors" were Disney and Coke, not because of bills incurred but because those companies financed aircraft and leased the equip back to Delta in order to enjoy the tax depreciations credits.

Like poster above said, BOD of companies are supposed to maximize shareholder value, usually that corresponds to a long term outlook, but sometimes they focus too much on the next quarter. Share price will respond to EPS, dividend increases, relative competitive advantages, financial stability of a company, and of course long term prospects of the business plan.
If your CEO and get fired over the next few quarters because you were too long term focused then you lose as well.