Down to three premium brands. Thank God.

 

What's your impression of the presentation overall? Any other tidbits?

 

I wasn't actively listening to the whole call, but overall it seemed positive. Nothing Earth shattering. They did offer up that we would hit the scope limit of larger RJ's sometime next year. Also stated that one 747 that was scheduled to exit this year will be around a bit longer.

 

I listen to the call and hear some of my highlights:
On a non GAAP basis their operating expenses decreased 10.3% year-over-year.
Their net income was actually $4.816 billion. That equates to earnings per-share of $12.83. When you add in there one time nonrecurring $3.2 billion tax benefit for the third-quarter 2015, the non-GAAP net income falls to $3.7 billion. That equates to $4.53 per-share. Analysts were expecting $4.55 per-share so it is a slight miss. What's interesting about the nonrecurring tax benefit is that 2014 also had a very significant Q3 nonrecurring tax benefit… in the notes of the earnings release, it says that the 3d quarter 2014 also had a "non-recurring" $4 million tax benefit. I'm not sure how to read between the smoke and mirrors to get the actual earnings. It is somewhere between $4.53 and $12.83 per-share…
They did mention the subject of free cash flow. One of the analysts ask the question why they don't talk more about free cash flow and the CFO said something about not liking how the numbers can be manipulated do too large CAPEX with airplane purchases. In either case using non-gap capital expenditures of $716 million for the quarter, the free cash flow still came out to be $627 million this quarter. That is fantastic and my bar napkin math shows a higher margin in this quarter them both Delta and Southwest. I haven't calculated American yet. The overall margin is north of 12% which is pretty good considering Denver to carry told us they only make $200 on every flight when combining mainline and regional total sorties per day.
The overall passengers went up year-over-year by 6.6%. The available seat miles went up by 3.7%. ( main line). The year-old and load factor was pretty constant at about 86% for the mainline and 84% for the regionals. Year-over-year there was not a significant change although overall it was slightly down to 85.6% year-over-year which is down two basis points.
Fuel costs year-over-year excluding hedgers we're down 43% from $3.02 per gallon to $1.72 per gallon. When including feel hedgers the average price per gallon was $1.87.
They did not forecast PRASM to get better until after the second quarter of 2016. They mainly accounted and attributed that to a headwind with a strong US dollar.
It kind of ****ed me off that all of the analysts were throwing underhanded softball pictures for their questions. The female who asked about regional aircraft purchasers got an answer that was already in the press and didn't push the issue any further. The bottom line is they said that they were going to hit their limit of 76 seat aircraft sometime in 2016. That's as if she didn't already know the question and answer. She should've been more specific and ask about the impact of new small narrowbody Jets and to provide some color on whether that type of acquisition is immediately accretive to PRASM and net income. There are also a number of very stupid questions about whether the interim CEO planned on continuing the same vision that Munoz had. As if I need her I'm CEO with that mouth a sick sidelined CEO on a conference call… What a stupid question.

 

I was fairly surprised that none of the analyst asked when the December FO bids would be released.

 

I wonder if they served the same coffee as provided on our flights? Did they mention that?

 

Thanks for the update Dave

 

It's all about the NOL's. Net Operating Losses from years past that can be carried forward by corporations to reduce income taxes owed. It's one of the many reasons analysts and investors concentrate on the "excluding special items" earnings.

 

Remember, all this is non- gaap. I haven't pulled up the report, but I would like to know what the real numbers say.