Ray Neidl raises his rating on AirTran

[PCL_128]

Yeah, I was pretty impressed with that one too. Probably just dumb luck, but maybe they really are smarter than they look.

It probably wouldn't have been an enormous bullet for us, anyway. According to the filing, only $37 million was in ARSs in the first place. It would have been a significant hit, but not crippling.

 

[Jonny Sacko]

So should that "expert" get ripped, or was he stating fact? I will always think he's a common crook, talking out his azz. To reverse his course a day later could literally KILL a company these days! It doesn't matter which company (airline), imagine the storm if he opened that crack mouth and came after AMR while the FAA was WRONGLY accusing them also. It's criminal. And to top it all off, I heard he's GAY too! Well maybe not, but he probably wishes he was! HOMO! No smiley on that one.

 

[FlyFastLiveSlow]

So should that "expert" get ripped, or was he stating fact? I will always think he's a common crook, talking out his azz. To reverse his course a day later could literally KILL a company these days! It doesn't matter which company (airline), imagine the storm if he opened that crack mouth and came after AMR while the FAA was WRONGLY accusing them also. It's criminal.

Good rant and quote until this point. Then you lost all of your credibility with the sentences below.

And to top it all off, I heard he's GAY too! Well maybe not, but he probably wishes he was! HOMO! No smiley on that one.

 

[Jonny Sacko]

Not so, what if he is? It's the same as that guy saying Airtran's going out of service soon. But in all seriousness, these guy's shouldn't be free to harm others period. Facts are fine, but a reversal the next day should require/trigger criminal investigations or something, all airline's are on rocky ground right now.

 

[Andy]

Jonny, I generally ignore upgrades and downgrades. This is Neidl/Calyon's first change in rating on AAI since June 07, when he downgraded it to Neutral with a $12 price target. I don't know why he opted to upgrade the stock, but I've seen a lot of reindeer games on upgrades/downgrades. I shorted Northwest stock all the way into bankruptcy; I can't tell you how many upgrades happened along the way. Upgrades and downgrades are for the 'dumb' money. Do your own due diligence and ignore analyst ratings.
I'm not short Airtran, but there was a LOT of action on this stock in the last hour; someone with a lot of money either dumped a ton of AAI stock or shorted a ton of stock. Volume on Friday was 6 times normal.
You don't see that kind of movement and volume unless someone knows something. This was by no means dumb money, nor is it related to Neidl's comments or Frontier's chap 11 filing. If it was related, you would have seen heavy volume at the open. There wasn't.
Look at the chart. Pretty steady all day until 306PM; then BAM! Dropping on heavy volume.

The dumb money bought AAI stock after hours; I also don't put it past the smart money to walk the stock back up on light after hours volume. Never catch a falling knife; it'll slice and dice your investment portfolio.

AAI's cash position is roughly the same as F9's prior to bankruptcy relative to size. It's going to be critical for them to increase their liquidity because if their credit card processor opts to require a holdback, they'll end up just like Frontier.
Should Airtran end up filing bankruptcy, they'll survive. They'll make a lot of cutbacks and shrink, but they'll come out the other side.

Again, I've got no position in Airtran either short or long; all of my current positions are short financials and short term treasuries (straight treasuries; no GNMAs, MBSs, etc).

 

[Jonny Sacko]

I've got no position either, I'm just suspicious of his motivations. Who's next? I personally would like to die in peace, not be announced by the town idiot. That's all I'm saying, and in no way do I think that's where Airtran's headed, it could be any one of the remaining guests in the library with the candle stick!

 

[PCL_128]

Andy's alarmism is unwarranted. Our cash position is at 15%+ our annual revenue and continuing to grow throughout the first half of the year. We are a long way from any triggers for hold-backs from the credit card companies. The stock will rebound tomorrow.

 

[RIDETHELIGHTING]

hey Andy if you don't have a dog in the fight why do you care and spend your time analyzing us?

 

[Secret Squirrel]

I would think that someone from United would be a little more worried about his own stability than others. UAUA is looking at almost 400 million loss this quarter and almost 900 million loss for the year. AAI is lookin at about 25 million loss for the quarter and about the same for the year. That kind of loss could put UAUA into a pretty poor cash position. Maybe you should short your own stock.

 

[Andy]

hey Andy if you don't have a dog in the fight why do you care and spend your time analyzing us?

I analyze a lot of stocks. I don't track AAI; no money to be made there. I was merely giving an opinion. Got a problem with me giving an unbiased opinion?

 

[Andy]

I would think that someone from United would be a little more worried about his own stability than others. UAUA is looking at almost 400 million loss this quarter and almost 900 million loss for the year. AAI is lookin at about 25 million loss for the quarter and about the same for the year. That kind of loss could put UAUA into a pretty poor cash position. Maybe you should short your own stock.

I've got enough outside of flying to not worry about this stuff.
Did you miss that I'm short financials? They have a better medium term risk/reward than airlines. I don't get emotional when it comes to investments; it's a great way to lose money.

You guys are sounding just like the Frontier guys a couple of weeks ago. I'm not the one that dumped more than 10 million shares of your stock on Friday. Looks like your stock had a lot of put action also.
Since you guys think that AAI is such a good investment, why not use this as a huge buying opportunity? Have the balls to put your money where your mouth is.

 

[Secret Squirrel]

I've got enough outside of flying to not worry about this stuff.
Did you miss that I'm short financials? They have a better medium term risk/reward than airlines. I don't get emotional when it comes to investments; it's a great way to lose money.

You guys are sounding just like the Frontier guys a couple of weeks ago. I'm not the one that dumped more than 10 million shares of your stock on Friday. Looks like your stock had a lot of put action also.
Since you guys think that AAI is such a good investment, why not use this as a huge buying opportunity? Have the balls to put your money where your mouth is.

Only an idiot puts any amount of money in his own companies stock let alone buys airline stocks. A United pilot would know the folly of that.

 

[Mr.B]

Only an idiot puts any amount of money in his own companies stock let alone buys airline stocks. A United pilot would know the folly of that.

Uhhh, that was Andy's point, no?

 

[PCL_128]

Since you guys think that AAI is such a good investment, why not use this as a huge buying opportunity? Have the balls to put your money where your mouth is.

Not even Warren Buffett was successful in airline investing. If he can't do it, I don't dare try it.

 

[Andy]

Uhhh, that was Andy's point, no?

Correct, which is why I can't understand why these guys are so defensive about their stock prices.
Hell, when I shorted the crap out of Countrywide and Downey Savings, I didn't have their employees giving me a hard time on other message boards about shorting their stocks. And yes, I do go to message boards to pick up company information - it can be very valuable.

None of this is personal; I invest to make money. In this case, I was merely trying to give an unbiased opinion of a stock. And no, I'd never buy an airline stock.
I think that UAUA is also a dog even though I hold 1.3 or so shares of the stock (post-BK distribution; Computershare commissions would leave me with $10). I don't even think that airlines are a good short because they're so crowded. If I were to short an airline, it wouldn't be AAI; not enough meat on the bone. I'd rather go after CAL since they've got a lot of aircraft deliveries coming up and I don't see where they can pare down their fleet easily. It's all about liquidity. To paraphrase Seinfeld, "Liquidity now!"

 

[spinproof]

"Other than PCL128 Airtran looks solid"....quote from Warren Buffetts play book!

 

[SkiFishFly]

I'm just a dumb pilot...

But if AAI's cash position increased by about 30 million in the first quarter...
Then, wouldn't they be expected to post a profit for that quarter?

How does a company increase it's cash position without making a profit??

Andy - you seem pretty smart on this stuff - help me understand.

 

[CitationLover]

But if AAI's cash position increased by about 30 million in the first quarter...
Then, wouldn't they be expected to post a profit for that quarter?

How does a company increase it's cash position without making a profit??

Andy - you seem pretty smart on this stuff - help me understand.

because profit/loss can involve non-cash transactions and accounting methodologies (depreciation, etc.).

another airline trick is the old "fare sale". by selling tickets cheaply for later in this year, when the lower yields will be actually recorded, the cash position is increased today.

 

[Andy]

But if AAI's cash position increased by about 30 million in the first quarter...
Then, wouldn't they be expected to post a profit for that quarter?

How does a company increase it's cash position without making a profit??

Andy - you seem pretty smart on this stuff - help me understand.

There are a lot of shell games that can be played, as CitationLover's pointed out.
I am suspicious of the press release since their figures included long term investments, so we can't really say for certain how much their cash position has changed.. There's nothing liquid about long term investments.

Another way to get cash is to take out a loan against some of your assets, so you've really got to wait until the 10K, or in this quarter's case, the 10Q to say be able to say where the cash came from.

And profitibility isn't the big issue with airlines right now; it's a secondary concern. It's all about cash on hand.

One of the reasons why I'm concerned about Airtran is that they are continuing to take aircraft deliveries. That costs money. While their cash position's OK, it can be burned through very quickly if you take delivery of a few aircraft. I'd have a better feeling about them if they were staying flat or shrinking their fleet plan.
Right now, there are several airlines betting that the recession is going to be short and shallow. With looking at the worldwide credit problems, that seems unlikely.

 

[PCL_128]

Andy, nothing in the press release listed long-term investments as part of the cash/equivalents total. Only short-term investments are included. Also, we're only taking delivery of two more airplanes this year. We're at 139 right now, and we'll be at 141 by the end of the year according to the last 8K. Two deliveries will not be a major drain on cash at all.