CAL stock up 250% in last 12 months

[satpak77]

CONGRATS to CAL, whose stock price was $12.50 in 11-2005.

Today it is $44.00. That is darn near a 250% return on your 12.50 bucks a share

http://finance.yahoo.com/q/bc?s=CAL&t=2y&l=on&z=l&q=b&c=

Maybe CAL can teach Peter Lynch a thing or two....

CAL has sure come a LONG way from the old gold meatball days of the 80's...

 

[Truckdriver]

CAL stock has indeed been very impressive. Sure wish I would have bought more when it was down in the teens. The CAL story goes to show that none of us know what our employers will be like 20 years from now. Who would have thought CAL would be where it is today after the 80's struggles and the double bankruptcy trip. Kind of makes you wonder what US AIR will be like here in a couple years.

 

[Captain Overs]

CAL is highly leveraged and has a lot of debt. Things are good as long as there is no hicup in the economy.

 

[EWR_FO]

CAL is highly leveraged and has a lot of debt. Things are good as long as there is no hicup in the economy.

That's what everybody said before 9/11, apparently all the other companies are more highly leveraged and have more debt. Sadly, this appears to be business as usual in corporate America these days.

 

[Captain Overs]

You're right except CAL has nothing for collateral. Last time they needed money they used aircraft parts to gain leverage. At some point you have to pay the piper.....or file bankruptcy.

 

[SuperKooter]

Well Cal is the best run Legacy out there. Our product is the best

 

[Captain Overs]

Well Cal is the best run Legacy out there. Our product is the best

Conde Naste just did a review of airlines. International, Domestic, and low cost. Three things went into the criteria:

1) Room for each passenger
2) In flight entertainment
3) Service

CAL finished 8th on the list for domestic airlines. Beaten by almost every major. You're right, I guess your product is the best.

 

[EWR_FO]

You're right except CAL has nothing for collateral. Last time they needed money they used aircraft parts to gain leverage. At some point you have to pay the piper.....or file bankruptcy.

Not sure what your beef with Continental is, but have you read any of the annual reports lately? There really aren't too many sterling looking balance sheets out there.

 

[FlyAuburn]

Do new hires receive company stock when they are hired? Just curious.

 

[EWR_FO]

Conde Naste just did a review of airlines. International, Domestic, and low cost. Three things went into the criteria:

1) Room for each passenger
2) In flight entertainment
3) Service

CAL finished 8th on the list for domestic airlines. Beaten by almost every major. You're right, I guess your product is the best.

If you look at the RASM compared to all the other carriers, there must be some reason people are willing to pay more.

 

[Truckdriver]

If you look at the RASM compared to all the other carriers, there must be some reason people are willing to pay more.

They only pay more on routes where there is no LCC competition.

 

[EWR_FO]

They only pay more on routes where there is no LCC competition.

Isn't that the objective, to make money?

 

[Truckdriver]

CAL offers the best legacy product out there right now. I will however say that CAL does not offer the best domestic product out there right now. I'll leave it up to you to figure out who I think has the best domestic product.

 

[EWR_FO]

CAL offers the best legacy product out there right now. I will however say that CAL does not offer the best domestic product out there right now. I'll leave it up to you to figure out who I think has the best domestic product.

I imagine you are talking about Jet Blue, no arguments here, I JS on them (you) all the time. Unfortunately, people have proven that they consistently choose domestic service almost exclusively by price. The average schmoe is not willing to pay a premium for better domestic service so having better domestic service doesn't appear to be the advantage it should be. This is the very reason Cal flies its 757-300's almost exclusively to FL. The cost is lower because of the number of available seats.

 

[Truckdriver]

Isn't that the objective, to make money?

Sure it is. But it only works until one of the LCC's puts service on that route. At that point the RASM at CAL drops when they price match and they lose money. The RASM on routes with LCC competition is probably very low. The problem CAL has is there aren't many domestic routes these days without LCC competition. So they get their money from international flights which works great until they open up the skies and LCC's head across the pond.

 

[EWR_FO]

Sure it is. But it only works until one of the LCC's puts service on that route. At that point the RASM at CAL drops when they price match and they lose money. The RASM on routes with LCC competition is probably very low. The problem CAL has is there aren't many domestic routes these days without LCC competition. So they get their money from international flights which works great until they open up the skies and LCC's head across the pond.

The costs of LCC's can do nothing but increase as the companies age. It also appears that the LCC's are running out of places to fly as the competition heats up. I agree, the RASM is probably very low on competing routes, but as long as it is positive they will continue to fly it.

I would think it would be prohibitively expensive for a LCC to start an international operation from scratch, but that is just my opinion.

 

[Andy Neill]

CAL has had a very good run. But when the market opens, I'm going to buy Dec $50 puts for $5.60 each. The more it goes down from its current $44.97 price, the more those puts will be worth. I'm betting they will be worth $9-$10.00 by the end of the week. I will post within a half hour of when I sell the puts.

 

[BID]

Not everyone likes to shop at Wal Mart.

 

[Truckdriver]

Not everyone likes to shop at Wal Mart.

Not everyone likes it, but everyone does it. Not everyone likes SWA either, but they flew more passengers than any airline has ever flown in a one month period last month.

 

[Truckdriver]

The costs of LCC's can do nothing but increase as the companies age. It also appears that the LCC's are running out of places to fly as the competition heats up. I agree, the RASM is probably very low on competing routes, but as long as it is positive they will continue to fly it.

I would think it would be prohibitively expensive for a LCC to start an international operation from scratch, but that is just my opinion.

LCC costs will increase as has been seen at JBLU the last year. Legacy costs also increase although not as much on a percentage basis as a newcomer. Once you get past the 5-6 year mark however, those increasing costs are not as much as the first 5 years. Most LCC's have now passed that mark so costs shouldn't be a great concern although they are a factor. I think the LCC's to watch out for when they open up the Atlantic will be those in Europe. Ryan Air and Easy Jet would not be good to US Legacies that are now depending on Atlantic traffic to keep their margins up. I agree that the costs of U.S LCC's starting up a big international operation would be expensive, but I think they would jump into the game if the yields looked right. SWA basically has a 757 operation with ATA and JBLU would have a common fleet type with the 330. I don't think it will ever happen, but never say never in this industry.