Fleet Discussion and News
11-18-2016, 07:46 AM
#22
Gets Weekends Off
Joined APC: Jul 2010
Position: window seat
Posts: 12,544
If I was mgmt and I knew the long term prospects of the company were good, the market was undervaluing my stock, and i had a glut of cash I wanted to put to use...I would forego using the cash for recapitalization provided my current assets could get the job done, undergo a massive buyback until my stock was fairly or overvalued, then release those treasury shares when I want to recapitalize my fleet and my stock price has essentially doubled or more. The stock has almost doubled off the low a couple months back...all those buyback shares have proven to be a wise decision at this point in time. If the shares are retired, stockholders win because of a negative dilution effect. If those shares are reissued at higher prices the company is better off, and the stockholders may also be as well depending on the ROI of the treasury share value. If they are reissued at lower prices than the buyback price, the company and stockholders all lose.
It remains to be seen what ultimately happens with this glut of buyback cash that has been used, but it's possible we all may win from it.
It remains to be seen what ultimately happens with this glut of buyback cash that has been used, but it's possible we all may win from it.
You absolutely can't attribute all or even most of the stock increases the entire sector has seen to buybacks. IOW, had airlines not bought back a single share, the ross section of airlines and every individual airline would still have achieved most of the gains they achieved. The increases really started well before the buybacks became trendy anyway.
My broader point is one day we will wake up in the middle of a financial storm and deeply regret the many billions wasted on buybacks. Maybe, as you suggest, if its timed perfectly and used with precision, it could result in better numbers down the road on some things. But I don't ever see any airline making more from this than they paid to do it.
The last time it rained, SWA crowd surfed above the entire industry taking marketshare with complete impunity and almost putting a legacy or two out of business, while paying 130 seat drivers higher than whale pay. All because they were making what, a billion a year off the hedges?
We still have a lot of debt too, despite the hype that they're paying it down. DL has less debt on capital but more on pensions. There will come a time when one or more legacies rues the day they whizzed away many many billions on something that will be viewed as relatively frivolous in hindsight.
Then again, B-School managers (not to be confused with leaders) are famous for measuring their mistakes in billion dollar increments.
11-18-2016, 11:11 AM
#23
Gets Weekends Off
Thread Starter
Joined APC: Feb 2015
Position: 777FO
Posts: 770
Dave/Probe - Boeing certainly seems to have painted itself into a corner with MOM. After the 787 debacle, I can't blame them for being gun-shy about launching another leap ahead aircraft (e.g. - double bubble, BWB, etc.). I imagine they are spending huge amounts of time in meetings agonizing about what to do.
Of course, the idea of a 737-10 Max has been floated recently as a possible near term alternative to MOM. So, unscientific survey here. Is there anyone out there besides accountants/mgmt who thinks a -10 Max would be a good idea? Explain. Come on, serious answers only, don't be shy. Anyone? Bueller?
I hope someone from Boeing is paying attention here.
Of course, the idea of a 737-10 Max has been floated recently as a possible near term alternative to MOM. So, unscientific survey here. Is there anyone out there besides accountants/mgmt who thinks a -10 Max would be a good idea? Explain. Come on, serious answers only, don't be shy. Anyone? Bueller?
I hope someone from Boeing is paying attention here.
11-18-2016, 12:19 PM
#24
UCH Pilot
Joined APC: Oct 2014
Position: 787
Posts: 776
Dave/Probe - Boeing certainly seems to have painted itself into a corner with MOM. After the 787 debacle, I can't blame them for being gun-shy about launching another leap ahead aircraft (e.g. - double bubble, BWB, etc.). I imagine they are spending huge amounts of time in meetings agonizing about what to do.
Of course, the idea of a 737-10 Max has been floated recently as a possible near term alternative to MOM. So, unscientific survey here. Is there anyone out there besides accountants/mgmt who thinks a -10 Max would be a good idea? Explain. Come on, serious answers only, don't be shy. Anyone? Bueller?
I hope someone from Boeing is paying attention here.
Of course, the idea of a 737-10 Max has been floated recently as a possible near term alternative to MOM. So, unscientific survey here. Is there anyone out there besides accountants/mgmt who thinks a -10 Max would be a good idea? Explain. Come on, serious answers only, don't be shy. Anyone? Bueller?
I hope someone from Boeing is paying attention here.
11-18-2016, 12:32 PM
#25
Gets Weekends Off
Joined APC: Nov 2009
Posts: 5,244
11-18-2016, 05:32 PM
#28
Gets Weekends Off
Joined APC: Sep 2014
Position: Airbus 320 Captain
Posts: 481
11-18-2016, 06:46 PM
#29
Gets Weekends Off
Joined APC: Feb 2011
Posts: 3,866
And the spinning millstone! Flew my "solo" captain flight in the service in a 1955 707. Got to the round dial 737 and I couldn't believe how similar the cockpits were.
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