Displaying items by tag: american airlines

Thursday, 21 May 2020 13:23

Prepare for an Airline Bankruptcy

(Atlanta)

The market is making a very strong bet that American Airlines—one of the largest carriers in the US—is going to fail. Bloomberg data shows that based on credit default swap pricing, investors think there is nearly a 100% chance of the Texas-based carrier defaulting in the next five years. There is nothing particularly unique about American Airlines’ exposure to the COVID crisis, except that it has a great deal more debt than other carriers, making it much more vulnerable. For its part, American is trying to “right size” its budget and is planning to downsize its operating expenditures by about $12 bn this year.


FINSUM: Cost cuts are great, but if your revenue has fallen 90%+ plus, all the costs cuts in the world aren’t likely to keep up.

Published in Eq: Total Market
Wednesday, 13 May 2020 12:27

Boeing Predicts Big Airline Bankruptcies

(Seattle)

The biggest aircraft maker in the country just put out a dire prediction (although not a surprising one)—that there will be a major airline bankruptcy this year. The airline industry has been wounded as never before, with demand falling more than 90% since this time last year. Most analysts think it will take until the end of year for demand to even rise to 50% of the year prior. Credit default swaps—a proxy for the odds a company will default—are very high right now. For instance, markets are putting a 54% chance that American Airlines defaults.


FINSUM: This is an odd comment from a company that is talking about its biggest clients. It speaks volumes.

Published in Eq: Value
Monday, 09 March 2020 11:06

Coronavirus will Cost Airlines $100 bn

(Atlanta)

We can finally put a number on it. Anecdotal evidence has shown that airlines and other travel companies are getting hammered. Now analysts have an estimate of just how much of a hit airlines are going to take. The answer is more than $100 bn of lost business because of coronavirus. The specific figure is $113 bn, a 4x increase in forecasted lost revenue from just two weeks ago. Big airlines like Delta, United, and Southwest have been cutting routes and flights left and right.


FINSUM: These stocks have gotten pummeled because of Coronavirus. When is the right time to buy in?

Published in Eq: Healthcare
Monday, 07 January 2019 08:32

The Best Value Stock Stocks Right Now

(New York)

The big market rout has left no shortage of stocks trading at large discounts to their previous valuations. The important question is which ones are actually a good value given the eruption in markets. With that in mind, here are four well-known names to take a look at. They are General Motors, CVS Health, Macy’s, and American Airlines. GM and AA are trading at near 5x earnings, the latter despite a thriving business. AT&T is interesting too, as shares have fallen 20% in the last year, and the dividend has swelled to 6.7%.


FINSUM: This seems like a good chance to pick up some healthy stocks that have been heavily dented by a selloff, but are poised to recover. We particularly like American Airlines and AT&T.

Published in Eq: Value
Tuesday, 25 September 2018 08:37

Which is the Best Airline Stock to Own?

(Atlanta)

The airline market has not been doing very well this year. Fuel prices and expanding capacity have weighed on the stocks. United is up big, but the rest of the pack is either in the red or up single digit percentages. Recently, there has been clear winners and losers, with United Continental, Delta, and Spirit being outperformers, and American, Alaska, and Southwest being laggards.


FINSUM: Airlines are an interesting sector, as each has its own unique characteristics, but they are all subject to similar woes. American Airlines has been a big loser this year, but some analysts think it could be the biggest gainer in the medium term.

Published in Eq: Large Cap

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