LUV

Yield Outlook Deteriorates for Airline Stocks

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/280098-yield-outlook-deteriorates-for-airline-stocks As we had outlined in our industry primer for airlines, the yield (pricing) environment for the group is treacherous and remains under perpetual pressure. The International Air Transport Association [IATA] released its July 2011 Airline Business Confidence Survey. Importantly, the IATA commented on the outlook for yields, which we reproduce below: While both passenger and cargo transport businesses saw improving yield performance during the second quarter of 2011, the trend is flattening. With demand-supply conditions weakening and concerns that markets may not bear further fare/rate rises, prospects for yields over the year ahead look flat. With over 80% of respondents reporting increased input costs during Q2, clearly high fuel costs have … Read more

AMR’s Big Order to Pressure Cash Flow, Boeing in Precarious Position

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277628-amrs-big-order-to-pressure-cash-flow-boeing-in-precarious-position Shortly after we released our analysis of the fleets of the largest domestic carriers, The Wall Street Journal reported that AMR Corp. (AMR) is interested in ordering as many as 250 planes from either Boeing (BA) or Airbus (EADSY.PK). Our analysis, the summary graph of which we provide below, indicated that AMR is roughly on par with Delta (DAL) for having the oldest fleet (read fuel-inefficient) among the Big 4 domestic majors, so we view this move as inevitable. (Click chart to expand) The Wall Street Journal also indicated that the order value could be as high as $15 billion (comprising about 250 planes), and we suspect the new aircraft being evaluated will … Read more

Word of Caution: Boeing’s Narrowbody Build Rate Is Unsustainable

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275567-word-of-caution-boeings-narrowbody-build-rate-is-unsustainable  Competition in the narrowbody market continues to heat up, and recent events only support our view that the large commercial jet-making duopoly of Boeing (BA) and Airbus will be shattered in coming years. First, last Wednesday, Boeing released plans to increase production of its 737 workhorse to 42 jets per month by the first half of 2014. We view this strictly as a competitive response to clear its massive narrowbody backlog in the face of firming global competition, not as an indication of incremental demand for Boeing’s soon-to-be-legacy 737NG (it will be replaced with either a re-engined model or a brand new build in coming years). Frequent readers were aware … Read more

A Serious Blow to Boeing is Looming

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This article was referenced on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275567-word-of-caution-boeings-narrowbody-build-rate-is-unsustainable As competition in the narrowbody market heats up before the Paris Air Show next week, Boeing appears to be losing favor with two of its best customers, Southwest and Ryanair. For those unfamiliar with Southwest’s and Ryanair’s fleets, they are all-Boeing 737 airplanes, and recent actions by these two carriers give us pause, especially as Boeing drags its feet on deciding what to do next with its workhorse 737. As Bloomberg reported some time ago, Southwest’s CEO Gary Kelly is not all that thrilled by Boeing’s delay in responding to Airbus’ A320neo and the CSeries offered by Bombardier–both planes offering cost advantages better than the 737NG in their corresponding seat … Read more

Boeing Faces Challenges in the Narrowbody Market

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273827-boeing-facing-challenges-in-narrowbody-market   Aerospace executives know all too well of the difficulties and complexity of developing brand new planes. Investors have learned that aerospace management is often too optimistic in setting entry-into-service dates. Readers have to look no further than the troubles and serial delays of Boeing’s 787 Dreamliner and Airbus’ A380 to get the gist of what I’m talking about. But have airline customers wised up, too? And, if so, will the perception of pursuing a brand new build to replace its 737 in 2019-2020 actually hurt Boeing and ultimately provide an advantage to Airbus’ A320neo in the 150 to 200 seat category? To the first question: absolutely. Bloomberg reported on Southwest’s (LUV) … Read more

Troubles Loom for Aviation Stocks

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273564-troubles-loom-for-aviation-stocks As many followers of airline equities know, rising jet fuel prices and concerns about the global economy can translate into some fairly poor performance for airline shares. Today, perhaps unsurprisingly, the International Air Transport Association (IATA) cut its profit forecast for the airline industry by more than half to just $4 billion in 2011, (down from the $8.6 billion it had estimated in March). For perspective, the industry earned $18 billion last year. This equates to roughly a 0.7% net margin and raises the probability of yet another year of airline losses. The major causes of this revision are well-known and have been in the headlines for weeks — natural … Read more

Industrial Bellwethers A Mixed Bag: GE, BA, CAT, DE, UNP

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Image Source: Caterpillar Inc – May 2022 Caterpillar Investor Day Presentation By Callum Turcan In this article, we cover the industrial landscape by digging into the recent financial and operational performance of General Electric Company (GE), Boeing Co (BA), Caterpillar Inc (CAT), Deere & Company (DE), and Union Pacific Corporation (UNP). Common themes include robust demand for their offerings, healthy order backlogs, and meaningful pricing power, though headwinds include substantial inflationary pressures, supply chain hurdles, and in certain instances, geopolitical tensions. General Electric will soon separate into three different publicly traded companies, and on a consolidated basis the firm is doing much better than years past. In 2022 and on a non-GAAP basis, General Electric is guiding for a 150+ … Read more

Cisco Rallies Big Time!

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Image shown: Performance of the S&P 500 (SPY) since August 2017. As US equities continue their newly-found volatility, let’s take a look at some recent earnings reports and other developments around the markets. Cisco, the workhorse of both simulated newsletter portfolios, put up a fantastic report and upped its dividend. Berkshire continues to love Apple, and we maintain the view that the 10-year Treasury rate may be the greatest determinant of how well stocks perform in the coming decades. Airlines, garbage stocks, the “gas tax,” and more. By Kris Rosemann and Brian Nelson, CFA Do you know how happy it makes us to say that Cisco (CSCO) has been a staple of both the simulated Best Ideas Newsletter portfolio and … Read more

Dividend Increases/Decreases for the Week Ending May 15

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Below we provide a list of firms that raised their dividends during the week ending May 15. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week AAON (AAON): now $0.19 per share semi-annual dividend, was $0.16. Cardinal Health (CAH): now $0.4859 per share quarterly dividend, was $0.4811. Farmers & Merchants Bancorp (FMCB): now $7.25 per share semi-annual dividend, was $7.15. GDL Fund (GDL): now $0.12 per share quarterly dividend, was $0.10. Israel Chemicals (ICL): now $0.023 per share quarterly dividend, was $0.018. iStar (STAR): now $0.11 per share quarterly dividend, was $0.10. … Read more

Stock Market Outlook for 2021

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By Valuentum Analysts February 8, 2021 2020 was one for the history books. We covered our thoughts and reflections on the past year in our “2020 Won’t Soon Be Forgotten” article (link here), and now we are looking towards the future. Global health authorities should be able to bring an end to the ongoing coronavirus (‘COVID-19’) pandemic sooner than many had expected as several vaccines have already been improved for emergency use and several others appear increasingly likely to get approved. Global vaccine distribution activities are currently underway, and this should allow the world to slowly return to pre-pandemic activities. Before then, immense stimulus measures launched primarily in developed nations should support global economic activities until the public health crisis … Read more