AirTran tacks on add'l $140M to cash

[Kenney G]

There lays the problem. Go back to before fuel started to really go up. Compared to Southwest and Jetblue, AirTran's profits were always significantly lower for an airline of its size. Bottom line AirTran has a revenue yield problem period. This is a problem that management better learn how to fix and fix it fast. The solution is not the employee compensation either! AirTran management has to find a better way to get better yield from their revenue or being the lowest cost airline doesn't mean a thing.

Airtran is also the only airline not carrying cargo in the belly for profit. They abandoned cargo over a year ago. Seems like leaving money on the table.

 

[75M]

$15.00 per checked bag = cargo.

 

[Lear70]

*snicker*

Cargo traditionally pays a LOT more than that for the same space...

 

[Steeler Fan]

*snicker*

Cargo traditionally pays a LOT more than that for the same space...

So what you're saying is that we should charge MORE per each checked bag? (Like Delta?)

 

[75M]

Lear, thanks for pickin' up what I'm puttin' down.

Congrats on the new house.

 

[gt1900]

Heres what you guys forget.... Pax demand will drop off less for the low cost carriers in hard times. Hard times like these with low fuel costs are probably the best thing to happen to Airtran. Many people are still going to fly. When pax have excess money in their pockets they have more flexability in their choices. In times like these the excess cash is not there so they are more likely to choose the cheapest product. Just look at the grocery stores. Overall sales are lower yet many of the cheap "store" brands sales are higher. In other words, people will stop buying Kellogs Raison Bran but they will start buying Krogers Raison bran because its cheaper... People still want their Raison Bran, and they also want their airline tickets. If youve noticed pax demand hasn't fallen off for AAI as much as it has with most other airlines. With a drop in fuel prices and more people switching to AAI for airtravel, AAI's profits should be good next year..... BTW... Analysts are predicting a $74 million profit for AAI in 2009... Two years of profits like that and AAI can increase their cash flows tremendously..

 

[Andy]

No, a depression is not likely, and I stick to my original prediction: the recession won't last longer than three quarters. You're still nuts.

Your prediction has been proven incorrect, unless you are saying that the recession ended in September. Note:
US in recession since December 2007: official panel
1 day ago
WASHINGTON (AFP) — A US recession began in December 2007, a panel of economists charged with the official designation of business cycles said Monday.
The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) said it made the determination during a conference call on Friday.
Link: http://www.google.com/hostednews/afp/article/ALeqM5hRvkyvGeuMDKzfcgn81xyNCWE1Ww

Your most recent post on this thread merely reinforces my original assessment of you:

Quite frankly, I am of the opinion that most of my posts are so far beyond your comprehension that you scoff at them rather than admit your ignorance on the subject.

The debt levels accumulated by all levels of society - personal, corporate and government - will result in a long and deep depression. The very best thing that could happen at this point is to stop all bailouts. I rarely agree with Kudlow, but I'm on the same page with him on ending bailouts. These bailouts merely drag out the inevitable and will make economic conditions worse in the long run.

 

[Andy]

2. Right now is a great time to buy. Yes, the market still has some drop left to it, but we'll see it happen in the next year. More importantly, because of the risk that Obama will make changes to the tax code, these banks are dumping a lot of NICE homes they were previously hanging onto.

Case in point, there was a foreclosure on the market for $248,000 a 2,700 sq ft home in a lakefront community. 6 year old home, under home warranty for 4 more years, great schools, fastest-growing area in the city, the last appraisal was at $265,000... I snagged it last week for $198,000, 30 year FHA Fixed at 5.78%. Because it's so far under appraisal, I have no PMI, my payments are about $1,300, and a 3 bedroom house for rent (unless it was a dump) would run me $1,100-1,200 a month anyway. I save money every month and, when the housing market recovers (2 years estimated if we don't have another big hit in the economy and get pushed into a 4-7 year depression), I'll sell it, take the equity, pay off my student loan, and use the rest as a down-payment on another home.

Houses CAN be invesments, you have to have housing anyway, and just because it's not going to make you money every month doesn't mean it's debt you need to avoid. Everyone needs to have a house... purchase smartly and you'll always be better off than renting.

Right now is a TERRIBLE time to buy a home. My original projections had housing prices bottoming in 2012. I've now moved that to 2014. That is, assuming that we don't see double digit inflation return.
In a deflationary environment, housing gets hammered more than most other assets. I'm sorry to hear that you decided to buy a house; I suggest that you step back for a bit and reevaluate that decision. You're currently in Memphis, right? Be careful, I think that you're going to see a lot of cutbacks at FedEx soon. And even if you don't see FedEx cutbacks, keep in mind that real estate is no longer local; it's national. You can thank securitization for that.

Homes can be an investment. In an inflationary environment. In a deflationary environment, they are an albatross. The smart money's renting.

 

[cybourg10]

I agree with Andy on the bailouts, it didn't help Japan in the 90s and it won't help us now. How long do you see this depression lasting and what can be done to help soften the blow? Do you think the dollar is going to continue getting stronger or will we see it collapse?

 

[JetFumes]

Right now is a TERRIBLE time to buy a home. My original projections had housing prices bottoming in 2012. I've now moved that to 2014. That is, assuming that we don't see double digit inflation return.
In a deflationary environment, housing gets hammered more than most other assets. I'm sorry to hear that you decided to buy a house; I suggest that you step back for a bit and reevaluate that decision. You're currently in Memphis, right? Be careful, I think that you're going to see a lot of cutbacks at FedEx soon. And even if you don't see FedEx cutbacks, keep in mind that real estate is no longer local; it's national. You can thank securitization for that.

Homes can be an investment. In an inflationary environment. In a deflationary environment, they are an albatross. The smart money's renting.

Not entirely correct. You have some tax advantages from owning. You need to figure out your tax bracket, and see if you could use some of the right-offs of interest, property tax,etc.. You can take home more every month. Obviously you need to buy at the right price, but the price of paying higher taxes can hurt as well.

 

[lowecur]

I agree with Andy on the bailouts, it didn't help Japan in the 90s and it won't help us now. How long do you see this depression lasting and what can be done to help soften the blow? Do you think the dollar is going to continue getting stronger or will we see it collapse?

The dollar will eventually collapse, but that won't happen till China, Russia, and Japan start pulling their $$$ out of here to support their own quickly sinking economies. The timing on that will start sometime next year. The Treasury will have to print $$$ as the Federal Reserve will have to fund it's debt from within. Thus will begin the monetization and eventual official devaluation of the dollar. Get your wheelbarrels out.

imp:​

 

[Andy]

Not entirely correct. You have some tax advantages from owning. You need to figure out your tax bracket, and see if you could use some of the right-offs of interest, property tax,etc.. You can take home more every month. Obviously you need to buy at the right price, but the price of paying higher taxes can hurt as well.

JetFumes, with all due respect, you have been brainwashed by realtors. And completely wrong.
Thanks to my investment strategy over the last year (yes, I put my money where my mouth is), I am DEEP in the 35% marginal tax bracket. In spite of that, home ownership would be an extremely poor decision for me.
Before a dime of your Schedule A 'counts', you need to remember that a standard deduction for married joint is $10,900. The realtors rarely mention that small 'detail' in their calculations.
I specifically wrote about the current environment (likely to persist through 2014). One needs to understand that for the average person, buying a home is a highly levered investment. It's an investment because you almost always have the choice to rent vice buy. If you put 20% down, you're levered 5:1. But most put down no more than 5%; levering themselves to 20:1 or greater. That's a play that makes a huge ROI when real estate prices increase, but will crush you when real estate prices decline. Take a look at the Case-Shiller Housing Index. November's numbers showed an annual average decrease in housing prices of 19.1%. Dallas fared best at a 3.3% annual decrease in home values. http://blogs.wsj.com/economics/2009/01/27/a-look-at-case-shiller-numbers-by-metro-area-5/ However, the month over month decrease was 2.2%, showing an acceleration on the downside.
In the past, I've seen where realtors have factored in home appreciation in order to justify buying a home. I suspect that they leave out home depreciation when working the numbers in the current evnironment. Considering that anyone buying a home today will likely owe more than that home's worth by the time that home prices bottom, it is foolish to buy a home today.

 

[Andy]

The dollar will eventually collapse, but that won't happen till China, Russia, and Japan start pulling their $$$ out of here to support their own quickly sinking economies. The timing on that will start sometime next year. The Treasury will have to print $$$ as the Federal Reserve will have to fund it's debt from within. Thus will begin the monetization and eventual official devaluation of the dollar. Get your wheelbarrels out.

imp:​

I'm not sure about a dollar collapse; we're the leper with the most fingers. However, China, Japan, et al will likely slow down on purchasing US Bonds considerably. This will drive interest rates through the roof, further trashing home values.

Again, I put my money where my mouth is and have a sizable position in TBT (ultrashort the 20 year bond).

 

[Andy]

No, a depression is not likely, and I stick to my original prediction: the recession won't last longer than three quarters. You're still nuts.

Last quarter's GDP of -3.8% puts the official 'recession' at 12 months. Nice call, PCL. I may be nuts, but at least I'm not delusional. http://online.wsj.com/article/SB123332206003833245.html

The same 'experts' that never saw this coming are calling for the 'recession' to end second half 2009. Good luck with that one. 2009 is likely to be much worse than 2008 as we see unemployment numbers exceed 9% (I'd call for >10% but I'll sandbag it with >9%).

I hate to say it, but the government is doing everything possible to make this economic downturn longer and deeper than the Great Depression. I no longer think that this will be a mild depression; we're heading full bore toward a multidecade economic malaise. Until they follow Andrew Mellon's sage advice to Hoover, we're in for a rough ride.

"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people." -Treasury Secretary Andrew Mellon's advice to President Hoover, November 1929

 

[Ty Webb]

That sounds like some pretty tough medicine, Andy . . the kind of medicine that kills the patient, not cures him.

I have heard that some recent US Gov;t bonds have an interest rate approaching zero. What do you think of the Gummint using the low-interest bonds to make mortgage loans to qualified buyers, at a very attractive (yet profitable) interest rate of, say 3 or 4 percent? The Government would then be producing liquidity while making a profit . . . . home sales could flourish at those low interest rates.