The Many Reasons a Delta Captain Votes NO
06-13-2012, 11:46 PM
#191
Banned
Joined APC: Jul 2006
Position: Space Shuttle PIC
Posts: 2,007
That's a common misconception I see being thrown out. The JPWA was in the spring of 2008. The whole world was melting down. From the time of the first offer to the time of the second offer, the economic picture was even more dire. Things are a bit more rosy right now.
06-14-2012, 02:40 AM
#192
On Reserve
Joined APC: Jul 2008
Position: MSP7ERB
Posts: 1,886
Oil prices plunge - windfall for airlines
Have Airline Stocks Become Defensive? | InvestorPlace
Have Airline Stocks Become Defensive?
by Daniel Putnam | June 8, 2012 7:00 am
Airline stocks are generally regarded as the ultimate cyclicals, but the sector has demonstrated some very defensive qualities throughout the spring sell-off. Even as the broader market spent the month of May staggering to a loss of 6%, the NYSE Arca Airline Index (XAL) was virtually unchanged with a return of -0.08%.
Looking slightly further back, airline stocks are actually the top performer among the 99 Dow Jones industry groups in the past three months — soundly beating such traditional defensive stalwarts such as beverages, utilities and telecommunications stocks.
It hasn’t always been this way. In the past, airlines could be counted on to underperform the broader market when stocks started heading south. In 2007-2008, for example, the XAL plunged over 58%, lagging the 36.3% loss of the S&P 500 by over 22 percentage points. In the post-tech bubble crash of 2001, XAL was off 30.8% on a year-to-date basis on the day prior to the 9/11 attacks, versus a loss of 17.3% for the S&P.
What’s different now? It’s true that airlines have reduced capacity and grown more willing to pass on costs to their customers. But the main factor helping the sector in the past month has been the weakness in oil prices, which in turn has led to a sharp drop in the price of jet fuel.
Using the United States Oil Fund (NYSE:USO[1]) as a proxy, oil is off nearly 20% since the beginning of May. The dramatic downturn has prompted leading airline analysts to boost earnings estimates and increase their price targets aggressively. In a report last week, JP Morgan analysts noted: “Lower fuel has a material impact (and) jet fuel prices have collapsed roughly 40 cents per gallon since February, representing an annualized $5.5 billion windfall for the industry. Yet, since the end of earnings (season), consensus has barely budged. Consensus appears wholly inadequate to us.”
For traders, the most interesting aspect of these developments is that airlines are showing signs of becoming a relatively safe haven *during periods of elevated risk aversion. Though trite, the term “risk on/risk off” applies when it comes to the relationship between oil prices and the broader equity market. The two have moved virtually in tandem during the past two years, rising together in risk-on periods and falling together when risk is off. From USO’s inception in 2006 through the beginning of the first Europe-related decline in May 2010, the ETF had a correlation of 0.55 with the S&P. In the period since, the correlation has risen to 0.74.*
As a result, stocks that can benefit from weakness in oil prices may now be more likely to outperform during market downturns than they did in the past. In airlines’ case, the biggest winner in this scenario would likely be US Airways (NYSE:LCC[2]) since the company doesn’t hedge its fuel costs. Indeed, the stock is up over 57% since April 1.
The likely loser? Southwest Airlines (NYSE:LUV[3]), which hedges aggressively and therefore has a lower correlation with the price of oil. LUV has outperformed the broader equity market since April 1, but its gain of 6.7% pales in comparison to the move in LCC.
It should be noted that outperformance for airline stocks in down markets is no sure thing. This strategy has worked in the most recent sell-off, and it also would have worked during the market downturn in mid-2010. From May 3 through July 2, 2010, the XAL returned -9.35%, but it outperformed the -14.68% return of the S&P thanks in part to a more than 20% drop in oil prices. In last year’s sell-off (July 22-Oct. 3), however, airlines were hit for a loss of 28.4% — far below the -17.8% return for the S&P.
This helps serve as a reminder that airlines will always have more than their share of volatility. But with healthier industry fundamentals and an improving track record of performance in down markets, it may pay to take a closer look at this sector the next time investors hit the “off” switch on risk.
Have Airline Stocks Become Defensive?
by Daniel Putnam | June 8, 2012 7:00 am
Airline stocks are generally regarded as the ultimate cyclicals, but the sector has demonstrated some very defensive qualities throughout the spring sell-off. Even as the broader market spent the month of May staggering to a loss of 6%, the NYSE Arca Airline Index (XAL) was virtually unchanged with a return of -0.08%.
Looking slightly further back, airline stocks are actually the top performer among the 99 Dow Jones industry groups in the past three months — soundly beating such traditional defensive stalwarts such as beverages, utilities and telecommunications stocks.
It hasn’t always been this way. In the past, airlines could be counted on to underperform the broader market when stocks started heading south. In 2007-2008, for example, the XAL plunged over 58%, lagging the 36.3% loss of the S&P 500 by over 22 percentage points. In the post-tech bubble crash of 2001, XAL was off 30.8% on a year-to-date basis on the day prior to the 9/11 attacks, versus a loss of 17.3% for the S&P.
What’s different now? It’s true that airlines have reduced capacity and grown more willing to pass on costs to their customers. But the main factor helping the sector in the past month has been the weakness in oil prices, which in turn has led to a sharp drop in the price of jet fuel.
Using the United States Oil Fund (NYSE:USO[1]) as a proxy, oil is off nearly 20% since the beginning of May. The dramatic downturn has prompted leading airline analysts to boost earnings estimates and increase their price targets aggressively. In a report last week, JP Morgan analysts noted: “Lower fuel has a material impact (and) jet fuel prices have collapsed roughly 40 cents per gallon since February, representing an annualized $5.5 billion windfall for the industry. Yet, since the end of earnings (season), consensus has barely budged. Consensus appears wholly inadequate to us.”
For traders, the most interesting aspect of these developments is that airlines are showing signs of becoming a relatively safe haven *during periods of elevated risk aversion. Though trite, the term “risk on/risk off” applies when it comes to the relationship between oil prices and the broader equity market. The two have moved virtually in tandem during the past two years, rising together in risk-on periods and falling together when risk is off. From USO’s inception in 2006 through the beginning of the first Europe-related decline in May 2010, the ETF had a correlation of 0.55 with the S&P. In the period since, the correlation has risen to 0.74.*
As a result, stocks that can benefit from weakness in oil prices may now be more likely to outperform during market downturns than they did in the past. In airlines’ case, the biggest winner in this scenario would likely be US Airways (NYSE:LCC[2]) since the company doesn’t hedge its fuel costs. Indeed, the stock is up over 57% since April 1.
The likely loser? Southwest Airlines (NYSE:LUV[3]), which hedges aggressively and therefore has a lower correlation with the price of oil. LUV has outperformed the broader equity market since April 1, but its gain of 6.7% pales in comparison to the move in LCC.
It should be noted that outperformance for airline stocks in down markets is no sure thing. This strategy has worked in the most recent sell-off, and it also would have worked during the market downturn in mid-2010. From May 3 through July 2, 2010, the XAL returned -9.35%, but it outperformed the -14.68% return of the S&P thanks in part to a more than 20% drop in oil prices. In last year’s sell-off (July 22-Oct. 3), however, airlines were hit for a loss of 28.4% — far below the -17.8% return for the S&P.
This helps serve as a reminder that airlines will always have more than their share of volatility. But with healthier industry fundamentals and an improving track record of performance in down markets, it may pay to take a closer look at this sector the next time investors hit the “off” switch on risk.
06-14-2012, 03:36 AM
#193
On Reserve
Joined APC: Jul 2008
Position: MSP7ERB
Posts: 1,886
HEARD ON THE STREET: OPEC Hawks Should Play the Long Game - WSJ.com
You need a WSJ subscription to view the full article, but it essentially states that due to the weak economy in Europe, OPEC will have to keep its target price of oil low (<$80/barrel) in order to preserve demand (future business). Otherwise many consumers, public & private, may permanently turn to alternative forms of energy.
You need a WSJ subscription to view the full article, but it essentially states that due to the weak economy in Europe, OPEC will have to keep its target price of oil low (<$80/barrel) in order to preserve demand (future business). Otherwise many consumers, public & private, may permanently turn to alternative forms of energy.
06-14-2012, 05:38 AM
#194
No longer cares
Joined APC: Mar 2008
Position: 767er Captain
Posts: 12,109
HEARD ON THE STREET: OPEC Hawks Should Play the Long Game - WSJ.com
You need a WSJ subscription to view the full article, but it essentially states that due to the weak economy in Europe, OPEC will have to keep its target price of oil low (<$80/barrel) in order to preserve demand (future business). Otherwise many consumers, public & private, may permanently turn to alternative forms of energy.
You need a WSJ subscription to view the full article, but it essentially states that due to the weak economy in Europe, OPEC will have to keep its target price of oil low (<$80/barrel) in order to preserve demand (future business). Otherwise many consumers, public & private, may permanently turn to alternative forms of energy.
OI have lots of money saving/money making ideas... vote yes is just one of many..
06-14-2012, 05:44 AM
#195
On Reserve
Joined APC: Jul 2008
Position: MSP7ERB
Posts: 1,886
HEARD ON THE STREET: OPEC Hawks Should Play the Long Game - WSJ.com
I've tried google news in the past, sometimes works and sometimes not.
06-14-2012, 05:52 AM
#196
Gets Weekends Off
Joined APC: Feb 2012
Position: A big one that looks like a little one
Posts: 633
Originally Posted by tsquare
With that knowledge.. you still voting no?
06-14-2012, 06:06 AM
#198
Gets Weekends Off
Joined APC: Apr 2008
Position: LAX ERA
Posts: 3,457
HEARD ON THE STREET: OPEC Hawks Should Play the Long Game - WSJ.com
You need a WSJ subscription to view the full article, but it essentially states that due to the weak economy in Europe, OPEC will have to keep its target price of oil low (<$80/barrel) in order to preserve demand (future business). Otherwise many consumers, public & private, may permanently turn to alternative forms of energy.
You need a WSJ subscription to view the full article, but it essentially states that due to the weak economy in Europe, OPEC will have to keep its target price of oil low (<$80/barrel) in order to preserve demand (future business). Otherwise many consumers, public & private, may permanently turn to alternative forms of energy.
My favorite part of the article:
We've become the world's lowest-cost producer of natural gas at a cost of $2 per thousand cubic feet; compare that with many European countries which have to pay seven times as much to Russia.
It's increasingly possible to use liquified natural gas as a substitute for oil as a transportation fuel, so the effects go beyond generating electricity. General Motors is planning to produce cars that can take natural gas or oil in their fuel tanks.
------------------------------
I may actually see my dream of being able to tell some overseas oil producing countries to take their oil and stick it where the sun don't shine
Ferd
06-14-2012, 06:08 AM
#199
On Reserve
Joined APC: Jul 2008
Position: MSP7ERB
Posts: 1,886
Zakaria: The game-changer in the geopolitics of energy – Global Public Square - CNN.com Blogs
My favorite part of the article:
We've become the world's lowest-cost producer of natural gas at a cost of $2 per thousand cubic feet; compare that with many European countries which have to pay seven times as much to Russia.
It's increasingly possible to use liquified natural gas as a substitute for oil as a transportation fuel, so the effects go beyond generating electricity. General Motors is planning to produce cars that can take natural gas or oil in their fuel tanks.
------------------------------
I may actually see my dream of being to tell some overseas oil producing countries to take their oil and stick it where the sun don't shine
Ferd
My favorite part of the article:
We've become the world's lowest-cost producer of natural gas at a cost of $2 per thousand cubic feet; compare that with many European countries which have to pay seven times as much to Russia.
It's increasingly possible to use liquified natural gas as a substitute for oil as a transportation fuel, so the effects go beyond generating electricity. General Motors is planning to produce cars that can take natural gas or oil in their fuel tanks.
------------------------------
I may actually see my dream of being to tell some overseas oil producing countries to take their oil and stick it where the sun don't shine
Ferd
06-14-2012, 06:21 AM
#200
Gets Weekends Off
Joined APC: Apr 2008
Position: LAX ERA
Posts: 3,457
The company has also spent much time and resources to negotiate a deal with us 8 months before our contract is amendable. Why would they do that Ferd? And when you answer that to your own satisfaction, ask yourself why they would have wasted those resources because they're too stubborn and need to show the pilots who's boss?
They know our process as well as we do. They know full well that a NO vote is possible. Thus, they would have been FOOLISH to give us their real bottom line on the first try. We'll be even more foolish if we take it.
Carl
They know our process as well as we do. They know full well that a NO vote is possible. Thus, they would have been FOOLISH to give us their real bottom line on the first try. We'll be even more foolish if we take it.
Carl
Part two. Got to thinking more this morning and thought I'd drop ya another line. Was going to send a PM, but what the heck.
I'm sure you're tired of reading my poker analogy (I don't think you can just get one of your down cards swapped, you have to wait for the next hand). I don't like my cards either. But, they are good enough for something this short and I'm willing to call the pot and see the next card (or what RA is in such a hurry about)
But, I also got to thinking why I'm willing to do that. There are so many great arguments as to why I'm wrong and I do listen and think about what has been said. So I came down to a military analogy for you.
I trust RA, I think he is a horse like say Patton in France or Grant in Virginia or Sherman.....wait never mind. We are headed into a dark forest and RA wants to attack "something" we just can't see it yet. Guys around me have VERY LEGITIMATE CONCERNS about flanks, supply lines and air cover. I'm not sure either, but based on past performance I'm willing to follow him into the forest. I've got my eyes closed but I'm walking forward
As I said, I think RA is a horse and I think he is going to make us some money. Some of his minions??.....I agree, watch your wallet!!
Ferd
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