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6300.0
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2019-11-20 00:00:00 UTC
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Wednesday Sector Laggards: Technology & Communications, Industrial
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AAL
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https://www.nasdaq.com/articles/wednesday-sector-laggards%3A-technology-communications-industrial-2019-11-20
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nan
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nan
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The worst performing sector as of midday Wednesday is the Technology & Communications sector, showing a 0.9% loss. Within that group, DXC Technology Co (Symbol: DXC) and AT&T Inc (Symbol: T) are two of the day's laggards, showing a loss of 3.6% and 3.3%, respectively. Among technology ETFs, one ETF following the sector is the Technology Select Sector SPDR ETF (Symbol: XLK), which is down 0.9% on the day, and up 41.38% year-to-date. DXC Technology Co, meanwhile, is down 31.78% year-to-date, and AT&T Inc is up 35.95% year-to-date. DXC makes up approximately 0.1% of the underlying holdings of XLK.
The next worst performing sector is the Industrial sector, showing a 0.9% loss. Among large Industrial stocks, American Airlines Group Inc (Symbol: AAL) and United Rentals Inc (Symbol: URI) are the most notable, showing a loss of 3.5% and 2.8%, respectively. One ETF closely tracking Industrial stocks is the Industrial Select Sector SPDR ETF (XLI), which is down 0.8% in midday trading, and up 27.95% on a year-to-date basis. American Airlines Group Inc, meanwhile, is down 10.70% year-to-date, and United Rentals Inc is up 44.37% year-to-date. Combined, AAL and URI make up approximately 0.9% of the underlying holdings of XLI.
Comparing these stocks and ETFs on a trailing twelve month basis, below is a relative stock price performance chart, with each of the symbols shown in a different color as labeled in the legend at the bottom:
Here's a snapshot of how the S&P 500 components within the various sectors are faring in afternoon trading on Wednesday. As you can see, two sectors are up on the day, while seven sectors are down.
25 Dividend Giants Widely Held By ETFs »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Combined, AAL and URI make up approximately 0.9% of the underlying holdings of XLI. Among large Industrial stocks, American Airlines Group Inc (Symbol: AAL) and United Rentals Inc (Symbol: URI) are the most notable, showing a loss of 3.5% and 2.8%, respectively. One ETF closely tracking Industrial stocks is the Industrial Select Sector SPDR ETF (XLI), which is down 0.8% in midday trading, and up 27.95% on a year-to-date basis.
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Among large Industrial stocks, American Airlines Group Inc (Symbol: AAL) and United Rentals Inc (Symbol: URI) are the most notable, showing a loss of 3.5% and 2.8%, respectively. Combined, AAL and URI make up approximately 0.9% of the underlying holdings of XLI. Among technology ETFs, one ETF following the sector is the Technology Select Sector SPDR ETF (Symbol: XLK), which is down 0.9% on the day, and up 41.38% year-to-date.
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Among large Industrial stocks, American Airlines Group Inc (Symbol: AAL) and United Rentals Inc (Symbol: URI) are the most notable, showing a loss of 3.5% and 2.8%, respectively. Combined, AAL and URI make up approximately 0.9% of the underlying holdings of XLI. The worst performing sector as of midday Wednesday is the Technology & Communications sector, showing a 0.9% loss.
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Among large Industrial stocks, American Airlines Group Inc (Symbol: AAL) and United Rentals Inc (Symbol: URI) are the most notable, showing a loss of 3.5% and 2.8%, respectively. Combined, AAL and URI make up approximately 0.9% of the underlying holdings of XLI. Within that group, DXC Technology Co (Symbol: DXC) and AT&T Inc (Symbol: T) are two of the day's laggards, showing a loss of 3.6% and 3.3%, respectively.
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6301.0
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2019-11-19 00:00:00 UTC
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3 Stocks Buffett Should Have Sold in the Third Quarter
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AAL
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https://www.nasdaq.com/articles/3-stocks-buffett-should-have-sold-in-the-third-quarter-2019-11-19
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nan
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nan
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There's little doubt that Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) CEO Warren Buffett is one of the greatest investors of our generation. Over the past roughly 65 years, he's turned $10,000 in investment seed capital into a net worth of over $86 billion, as of this past weekend. And, as I often remind folks, this fails to include the tens of billions he's donated to charity over the years, or the more than $400 billion in market value Berkshire Hathaway stock has created for shareholders over the years.
Maybe the most exciting thing about Buffett's investing strategy is the quarterly look under the hood provided by 13F filings with the Securities and Exchange Commission (SEC). Form 13F is a requirement for companies with more than $100 million in assets under management. It effectively allows investors a snapshot of the holdings of the country's top money managers, as well as gives us an idea of what they were up to in the previous quarter.
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Image source: The Motley Fool.
Buffett and his team were fairly active during the third quarter
This past week, Berkshire Hathaway filed its 13F with the SEC, thereby disclosing its holdings as of Sept. 30, 2019.
In terms of positional shuffling, it was actually a very active quarter for Buffett and Berkshire Hathaway, with two new purchases and five separate stock sales. As my Foolish colleague Matthew Frankel covered in detail, Buffett added two new positions to Berkshire's portfolio during the third quarter: furniture manufacturer RH and integrated oil and gas company Occidental Petroleum.
At the same time, five stocks were either reduced or given the heave-ho, including Apple, Sirius XM, Wells Fargo, Phillips 66, and Red Hat, which is now owned by IBM. It should be noted that the Red Hat acquisition was an all-cash buyout, meaning Buffett's disposition of stock was mandatory in this instance. The remaining sales really aren't that notable, with the Oracle of Omaha regularly paring back his stakes of Wells Fargo and Phillips 66 of late, and the Apple and Sirius XM sales representing a very small percentage of Berkshire's total holdings in both companies.
After the third-quarter shuffling, Berkshire Hathaway now owns exactly four dozen securities. But, in my opinion, there are three other stocks that Buffett should have sold or pared down during the third quarter.
Image source: American Airlines.
American Airlines Group
In 2007, Buffett absolutely blasted the airline industry in his annual letter to shareholders. He used airlines as an example of an industry where "a durable competitive advantage has proven elusive," and proclaimed that "the worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money." And yet, Buffett has been an active buyer of airlines in recent years. Despite this 180 on airlines, I believe Buffett should be thinking about paring or abandoning his stake in American Airlines Group (NASDAQ: AAL).
On a macro level, airlines have an exceptionally poor track record of surviving downturns in the U.S. economy. The problem is that, despite being in the longest economic expansion on record (dating back 160 years), all economic expansions eventually come to an end. Contractions and troughs are simply a part of the economic cycle, and American Airlines isn't built to survive prolonged weakness in the U.S. economy.
Relative to its peers, American Airlines has what's arguably the worst balance sheet. While it's not uncommon for major airlines to be carrying around a net-debt position on their balance sheets, American Airlines has $34.4 billion in total debt, and $29.3 billion in net debt, which are high-water marks for the U.S. airline industry. Although low interest rates have been a clear blessing for American as it's pledged to upgrade its fleet, things really aren't going to get any better for the company from a balance sheet perspective than they are now. That bodes poorly for the company's future.
Image source: Kraft Heinz.
Kraft Heinz
Among the four dozen holdings in Berkshire Hathaway's portfolio, none has arguably been more of a dumpster fire in 2019 than food and beverage company Kraft Heinz (NASDAQ: KHC). Even though another Buffett stock has been worse in the percentage decline department, no company has cost Berkshire more money this year than Kraft Heinz. In total, Berkshire owns more than 325 million shares of the company, resulting in a year-to-date loss of almost $3.1 billion, including dividends paid, through this past weekend.
The problems really came to light for Kraft Heinz in February, when the company took a whopping $15.4 billion charge to writedown the value of a number of its brands. Even after this valuation writedown, Kraft Heinz is still lugging around $35.8 billion in goodwill, as well as $28.1 billion in long-term debt. In short, the balance sheet is a mess, and in hindsight it's become apparent that Heinz grossly overpaid for Kraft Foods a few years ago. The company probably needs quite a bit of capital to reignite North American sales, but it simply doesn't have it at the moment, with cost-cutting, rather than spending, the first order of business.
For his part, Buffett has said that Berkshire will not sell its stake in Kraft Heinz, which represents 26.7% of the company's outstanding shares. Doing so would add even more pressure to an already pummeled stock. However, I don't understand why Buffett doesn't slowly pare his position, a few million shares per quarter. Kraft Heinz doesn't appear anywhere near turning itself around anytime soon, and Buffett could certainly find better places to park his money.
Image source: Getty Images.
Teva Pharmaceutical Industries
Finally, I remain somewhat surprised that Berkshire Hathaway hasn't sold a single share of embattled brand-name and generic drug developer Teva Pharmaceutical Industries (NYSE: TEVA). It should be noted that Teva was initially added to Berkshire's portfolio by one of Buffett's trusted investment team members, and not the Oracle of Omaha himself.
Initially, when Berkshire first bought into Teva, I believed that Teva met a lot of the qualities that Buffett himself would look for in an investment. And while I continue to believe in Teva (I've been a shareholder for some time), the company simply doesn't mesh with Buffett's investment style any longer.
As a refresher, Teva Pharmaceutical has seen its top-selling brand-name drug exposed to generic competition, settled bribery charges, dealt with executive turnover, and contended with generic-drug pricing weakness, all within a span of two years. More recently, it's faced lawsuits from 44 states over the role it played in the rise of opioid prescriptions in the United States. As the icing on the cake, the company also sports nearly $27 billion in total debt. These are not issues that Buffett is typically willing to tolerate, nor is healthcare a sector that the Oracle of Omaha much cares for.
Though I believe Teva has the tools to be a long-term success story, it doesn't meet the criteria that Buffett typically looks for in an investment. As such, I believe it would have been wise for Berkshire to begin paring down its position during the third quarter.
10 stocks we like better than Teva Pharmaceutical Industries
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Teva Pharmaceutical Industries wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Sean Williams owns shares of Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool is short shares of IBM. The Motley Fool recommends RH and Sirius XM Radio and recommends the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2020 $200 calls on IBM, short January 2020 $200 puts on IBM, short January 2020 $155 calls on IBM, and short January 2020 $220 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Despite this 180 on airlines, I believe Buffett should be thinking about paring or abandoning his stake in American Airlines Group (NASDAQ: AAL). As my Foolish colleague Matthew Frankel covered in detail, Buffett added two new positions to Berkshire's portfolio during the third quarter: furniture manufacturer RH and integrated oil and gas company Occidental Petroleum. He used airlines as an example of an industry where "a durable competitive advantage has proven elusive," and proclaimed that "the worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money."
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Despite this 180 on airlines, I believe Buffett should be thinking about paring or abandoning his stake in American Airlines Group (NASDAQ: AAL). At the same time, five stocks were either reduced or given the heave-ho, including Apple, Sirius XM, Wells Fargo, Phillips 66, and Red Hat, which is now owned by IBM. Teva Pharmaceutical Industries Finally, I remain somewhat surprised that Berkshire Hathaway hasn't sold a single share of embattled brand-name and generic drug developer Teva Pharmaceutical Industries (NYSE: TEVA).
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Despite this 180 on airlines, I believe Buffett should be thinking about paring or abandoning his stake in American Airlines Group (NASDAQ: AAL). Even though another Buffett stock has been worse in the percentage decline department, no company has cost Berkshire more money this year than Kraft Heinz. Teva Pharmaceutical Industries Finally, I remain somewhat surprised that Berkshire Hathaway hasn't sold a single share of embattled brand-name and generic drug developer Teva Pharmaceutical Industries (NYSE: TEVA).
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Despite this 180 on airlines, I believe Buffett should be thinking about paring or abandoning his stake in American Airlines Group (NASDAQ: AAL). Contractions and troughs are simply a part of the economic cycle, and American Airlines isn't built to survive prolonged weakness in the U.S. economy. Teva Pharmaceutical Industries Finally, I remain somewhat surprised that Berkshire Hathaway hasn't sold a single share of embattled brand-name and generic drug developer Teva Pharmaceutical Industries (NYSE: TEVA).
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6302.0
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2019-11-18 00:00:00 UTC
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How Much Of American Airlines' Revenues Comes From Domestic Passenger Travel?
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AAL
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https://www.nasdaq.com/articles/how-much-of-american-airlines-revenues-comes-from-domestic-passenger-travel-2019-11-18
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nan
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nan
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American Airlines (NASDAQ: AAL) is the largest airline in the world in terms of fleet size, revenues generated as well as passengers carried. In 2018, it operated 956 mainline aircraft and 595 regional aircraft in its fleet. American carries out its regional operations under the banner of American Eagle, which includes wholly-owned subsidiaries of American Airlines and certain other third-party carriers.
Trefis captures trends in American Airlines Revenues over recent years along with our forecast for the next 2 in an interactive dashboard along-with the trends in key operational parameters. We note that despite the airline’s sizable presence outside the U.S., domestic passenger revenues account for roughly 73% of American Airlines’ total passenger revenues, which in turn represents just over two-thirds of the company’s total revenues.
A Quick Look at American Airlinesâ Revenues
American Airlinesâ reported $44.5 billion in Total Operating Revenues for full-year 2018. This includes three revenue streams:
Passenger Revenue: $40 billion in FY2018 (91% of Total Revenues). It represents income from the sale of air tickets and other ancillary offerings for the companyâs mainline and affiliate carriers. If a ticket is sold and travel is yet to happen, the company recognizes income from such tickets as air traffic liability. Due to the complex structure of ticket pricing, cancellation and rescheduling, a certain portion of the liability is recognized as passenger revenues based on recognized historical patterns.
Cargo Revenue: $1 billion in FY2018 (2% of Total Revenues). It represents income freight and mail services.
Other Revenue: $3 billion in FY2018 (7% of Total Revenues). It comprises of the sale of loyalty points to credit card companies.
Despite Strong Global Presence, Domestic Operations Contribute The Highest By Far
Despite a presence in more than 50 countries, the companyâs domestic operations contribute a majority of its passenger revenues.
In 2018, $29.6 billion of $40.6 billion in passenger revenues came from domestic operations, representing nearly 70% of the total passenger revenues.
The share of other prominent geographies: Latin America, Atlantic, and Pacific in American Airlines’ passenger revenues, is elaborated in our interactive dashboard.
Notably, the company currently faces capacity constraints from the grounding of its 24 Boeing 737 MAX aircraft. With American Airlines looking to add 40 of these aircraft to its fleet over coming years (nearly 20% of new aircraft additions by 2022), the expected delay in delivery of these aircrafts will negatively impact growth in capacity in the near future. This is expected to weigh on Passenger revenues for American Airlines over several quarters.
Whatâs behind Trefis? See How itâs Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Data
Like our charts? Explore example interactive dashboards and create your own
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (NASDAQ: AAL) is the largest airline in the world in terms of fleet size, revenues generated as well as passengers carried. It represents income from the sale of air tickets and other ancillary offerings for the companyâs mainline and affiliate carriers. The share of other prominent geographies: Latin America, Atlantic, and Pacific in American Airlines’ passenger revenues, is elaborated in our interactive dashboard.
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American Airlines (NASDAQ: AAL) is the largest airline in the world in terms of fleet size, revenues generated as well as passengers carried. A Quick Look at American Airlinesâ Revenues American Airlinesâ reported $44.5 billion in Total Operating Revenues for full-year 2018. This includes three revenue streams: Passenger Revenue: $40 billion in FY2018 (91% of Total Revenues).
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American Airlines (NASDAQ: AAL) is the largest airline in the world in terms of fleet size, revenues generated as well as passengers carried. We note that despite the airline’s sizable presence outside the U.S., domestic passenger revenues account for roughly 73% of American Airlines’ total passenger revenues, which in turn represents just over two-thirds of the company’s total revenues. This includes three revenue streams: Passenger Revenue: $40 billion in FY2018 (91% of Total Revenues).
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American Airlines (NASDAQ: AAL) is the largest airline in the world in terms of fleet size, revenues generated as well as passengers carried. We note that despite the airline’s sizable presence outside the U.S., domestic passenger revenues account for roughly 73% of American Airlines’ total passenger revenues, which in turn represents just over two-thirds of the company’s total revenues. It represents income from the sale of air tickets and other ancillary offerings for the companyâs mainline and affiliate carriers.
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6303.0
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2019-11-11 00:00:00 UTC
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2 Top Airlines Just Postponed the Boeing 737 MAX's Return (Again)
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AAL
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https://www.nasdaq.com/articles/2-top-airlines-just-postponed-the-boeing-737-maxs-return-again-2019-11-11
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nan
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A little more than a month after the mid-March grounding of the Boeing (NYSE: BA) 737 MAX, American Airlines (NASDAQ: AAL) removed the troubled model from its flight schedule through Aug. 19. At the time, American Airlines' top two executives insisted that the move was being made out of an abundance of caution. CEO Doug Parker and President Robert Isom stated that they expected the 737 MAX to be recertified before August and that the airline would use its 24 737 MAX 8s as spares over the summer.
Unfortunately, Boeing has encountered numerous obstacles while trying to get the 737 MAX back in the air. As a result, customers like American Airlines and Southwest Airlines (NYSE: LUV) have had to repeatedly push back the 737 MAX's scheduled return to service. Following Boeing's latest setback, these carriers recently extended their 737 MAX cancellations to March 2020.
A new month, a new setback
It didn't take long following the 737 MAX grounding for Boeing to design a software update to address the faulty MCAS system that was involved in both fatal 737 MAX crashes. However, while testing that software fix in an extreme scenario, test pilots uncovered a new vulnerability that required additional software changes.
Boeing finally submitted its final software package to the FAA last month. This put Boeing on track to do simulator tests with FAA observers in early November, followed by an official certification flight later in the month. If all had gone well, the 737 MAX could have been recertified before the end of 2019.
Southwest's 737 MAX fleet will remain grounded until at least March. Image source: Southwest Airlines.
Yet Boeing suffered another setback last week, as regulators from the FAA and its European counterpart demanded revised documentation for the software update. Boeing characterized the request as a formatting issue and said that it could be resolved within days. Other sources told Reuters that Boeing's documentation was "substandard" and had gaps -- and that it could potentially take weeks to fix the issues.
Until the documentation audit is completed, Boeing won't be able to schedule a certification test flight for the FAA. Given that it will take at least 30 days following a certification flight for the FAA to officially lift the grounding order, it now seems almost certain that the 737 MAX will remain grounded into early 2020.
American Airlines and Southwest Airlines change the timeline again
Airlines won't be able to reintroduce the Boeing 737 MAX immediately after the FAA lifts the grounding order. It will take a month or more to complete necessary maintenance procedures and crew training to prepare for the 737 MAX's return.
As a result, Southwest Airlines revealed in its quarterly report -- filed on Friday -- that it plans to remove the 737 MAX from its flight schedule through March 6, 2020. Prior to this change, it already had the most conservative schedule of the three main U.S. operators of the type, with plans to bring the 737 MAX back after Feb. 8. However, management clearly decided that the early February return date was still unrealistic.
Later that same day, American Airlines followed suit, postponing the 737 MAX's scheduled return to service from mid-January to March 5. It said this change was "based on the latest guidance" from Boeing, the FAA, and the Department of Transportation.
Boeing cannot afford any more delays
The 737 MAX grounding has already hurt the bottom line at American Airlines and Southwest Airlines to the tune of hundreds of millions of dollars. Those losses will continue to grow in the months ahead. Boeing has acknowledged that it will need to compensate airlines in one way or another -- potentially through discounts on future aircraft purchases -- for their 737 MAX-related losses.
The good news about the latest delay to the 737 MAX recertification schedule is that for the most part, late January and February are off-peak periods for airlines (with the exception of Presidents' Day week). Airlines typically reduce aircraft utilization during this period to align supply with demand, so they are better positioned to adjust to the loss of capacity from the extended 737 MAX grounding.
However, if the 737 MAX's return is delayed any further, the grounding would impact the busy spring break travel season. Furthermore, airlines are planning for a phased return to service of their 737 MAX fleets, which means that additional delays could start to impact the summer peak season.
Boeing is already going to face a hefty bill for its 737 MAX debacle. To keep those costs from spiraling out of control, the aircraft manufacturing giant needs to ensure that its most important model is recertified by the end of January, if not earlier.
10 stocks we like better than Boeing
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Boeing wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg is long January 2020 $20 calls on American Airlines Group and long January 2021 $40 calls on Southwest Airlines. The Motley Fool owns shares of and recommends Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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A little more than a month after the mid-March grounding of the Boeing (NYSE: BA) 737 MAX, American Airlines (NASDAQ: AAL) removed the troubled model from its flight schedule through Aug. 19. The good news about the latest delay to the 737 MAX recertification schedule is that for the most part, late January and February are off-peak periods for airlines (with the exception of Presidents' Day week). Airlines typically reduce aircraft utilization during this period to align supply with demand, so they are better positioned to adjust to the loss of capacity from the extended 737 MAX grounding.
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A little more than a month after the mid-March grounding of the Boeing (NYSE: BA) 737 MAX, American Airlines (NASDAQ: AAL) removed the troubled model from its flight schedule through Aug. 19. Until the documentation audit is completed, Boeing won't be able to schedule a certification test flight for the FAA. See the 10 stocks *Stock Advisor returns as of June 1, 2019 Adam Levine-Weinberg is long January 2020 $20 calls on American Airlines Group and long January 2021 $40 calls on Southwest Airlines.
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A little more than a month after the mid-March grounding of the Boeing (NYSE: BA) 737 MAX, American Airlines (NASDAQ: AAL) removed the troubled model from its flight schedule through Aug. 19. American Airlines and Southwest Airlines change the timeline again Airlines won't be able to reintroduce the Boeing 737 MAX immediately after the FAA lifts the grounding order. Boeing cannot afford any more delays The 737 MAX grounding has already hurt the bottom line at American Airlines and Southwest Airlines to the tune of hundreds of millions of dollars.
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A little more than a month after the mid-March grounding of the Boeing (NYSE: BA) 737 MAX, American Airlines (NASDAQ: AAL) removed the troubled model from its flight schedule through Aug. 19. As a result, customers like American Airlines and Southwest Airlines (NYSE: LUV) have had to repeatedly push back the 737 MAX's scheduled return to service. Southwest's 737 MAX fleet will remain grounded until at least March.
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6304.0
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2019-11-11 00:00:00 UTC
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Insiders Bullish on Certain Holdings of OMFL
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AAL
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https://www.nasdaq.com/articles/insiders-bullish-on-certain-holdings-of-omfl-2019-11-11
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nan
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nan
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A look at the weighted underlying holdings of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL) shows an impressive 13.8% of holdings on a weighted basis have experienced insider buying within the past six months.
American Airlines Group Inc (Symbol: AAL), which makes up 0.64% of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), has seen 9 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The ETF holds a total of $7,460,534 worth of AAL, making it the #12 largest holding. The table below details the recent insider buying activity observed at AAL:
AAL — last trade: $30.76 — Recent Insider Buys:
And DISH Network Corp (Symbol: DISH), the #93 largest holding among components of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), shows 3 directors and officers as recently filing Form 4's indicating purchases. The ETF holds $4,182,083 worth of DISH, which represents approximately 0.36% of the ETF's total assets at last check. The recent insider buying activity observed at DISH is detailed in the table below:
DISH — last trade: $35.32 — Recent Insider Buys:
10 ETFs With Stocks That Insiders Are Buying »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines Group Inc (Symbol: AAL), which makes up 0.64% of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), has seen 9 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The table below details the recent insider buying activity observed at AAL: AAL — last trade: $30.76 — Recent Insider Buys: And DISH Network Corp (Symbol: DISH), the #93 largest holding among components of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), shows 3 directors and officers as recently filing Form 4's indicating purchases. The ETF holds a total of $7,460,534 worth of AAL, making it the #12 largest holding.
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American Airlines Group Inc (Symbol: AAL), which makes up 0.64% of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), has seen 9 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The table below details the recent insider buying activity observed at AAL: AAL — last trade: $30.76 — Recent Insider Buys: And DISH Network Corp (Symbol: DISH), the #93 largest holding among components of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), shows 3 directors and officers as recently filing Form 4's indicating purchases. The ETF holds a total of $7,460,534 worth of AAL, making it the #12 largest holding.
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The table below details the recent insider buying activity observed at AAL: AAL — last trade: $30.76 — Recent Insider Buys: And DISH Network Corp (Symbol: DISH), the #93 largest holding among components of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), shows 3 directors and officers as recently filing Form 4's indicating purchases. American Airlines Group Inc (Symbol: AAL), which makes up 0.64% of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), has seen 9 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The ETF holds a total of $7,460,534 worth of AAL, making it the #12 largest holding.
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American Airlines Group Inc (Symbol: AAL), which makes up 0.64% of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), has seen 9 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The ETF holds a total of $7,460,534 worth of AAL, making it the #12 largest holding. The table below details the recent insider buying activity observed at AAL: AAL — last trade: $30.76 — Recent Insider Buys: And DISH Network Corp (Symbol: DISH), the #93 largest holding among components of the Invesco Russell 1000—Dynamic Multifactor ETF (OMFL), shows 3 directors and officers as recently filing Form 4's indicating purchases.
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6305.0
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2019-11-08 00:00:00 UTC
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Noteworthy Friday Option Activity: AAL, MSFT, LVS
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AAL
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https://www.nasdaq.com/articles/noteworthy-friday-option-activity%3A-aal-msft-lvs-2019-11-08
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nan
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nan
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Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 45,110 contracts has been traded thus far today, a contract volume which is representative of approximately 4.5 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 57.2% of AAL's average daily trading volume over the past month, of 7.9 million shares. Especially high volume was seen for the $30.50 strike call option expiring November 08, 2019, with 8,282 contracts trading so far today, representing approximately 828,200 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $30.50 strike highlighted in orange:
Microsoft Corporation (Symbol: MSFT) saw options trading volume of 125,276 contracts, representing approximately 12.5 million underlying shares or approximately 52.9% of MSFT's average daily trading volume over the past month, of 23.7 million shares. Especially high volume was seen for the $145 strike call option expiring November 08, 2019, with 12,186 contracts trading so far today, representing approximately 1.2 million underlying shares of MSFT. Below is a chart showing MSFT's trailing twelve month trading history, with the $145 strike highlighted in orange:
And Las Vegas Sands Corp (Symbol: LVS) saw options trading volume of 14,029 contracts, representing approximately 1.4 million underlying shares or approximately 41.4% of LVS's average daily trading volume over the past month, of 3.4 million shares. Particularly high volume was seen for the $64 strike call option expiring November 08, 2019, with 2,313 contracts trading so far today, representing approximately 231,300 underlying shares of LVS. Below is a chart showing LVS's trailing twelve month trading history, with the $64 strike highlighted in orange:
For the various different available expirations for AAL options, MSFT options, or LVS options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Especially high volume was seen for the $30.50 strike call option expiring November 08, 2019, with 8,282 contracts trading so far today, representing approximately 828,200 underlying shares of AAL. Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 45,110 contracts has been traded thus far today, a contract volume which is representative of approximately 4.5 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 57.2% of AAL's average daily trading volume over the past month, of 7.9 million shares.
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Below is a chart showing AAL's trailing twelve month trading history, with the $30.50 strike highlighted in orange: Microsoft Corporation (Symbol: MSFT) saw options trading volume of 125,276 contracts, representing approximately 12.5 million underlying shares or approximately 52.9% of MSFT's average daily trading volume over the past month, of 23.7 million shares. Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 45,110 contracts has been traded thus far today, a contract volume which is representative of approximately 4.5 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 57.2% of AAL's average daily trading volume over the past month, of 7.9 million shares.
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Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 45,110 contracts has been traded thus far today, a contract volume which is representative of approximately 4.5 million underlying shares (given that every 1 contract represents 100 underlying shares). Below is a chart showing AAL's trailing twelve month trading history, with the $30.50 strike highlighted in orange: Microsoft Corporation (Symbol: MSFT) saw options trading volume of 125,276 contracts, representing approximately 12.5 million underlying shares or approximately 52.9% of MSFT's average daily trading volume over the past month, of 23.7 million shares. That number works out to 57.2% of AAL's average daily trading volume over the past month, of 7.9 million shares.
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Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 45,110 contracts has been traded thus far today, a contract volume which is representative of approximately 4.5 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 57.2% of AAL's average daily trading volume over the past month, of 7.9 million shares. Especially high volume was seen for the $30.50 strike call option expiring November 08, 2019, with 8,282 contracts trading so far today, representing approximately 828,200 underlying shares of AAL.
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6306.0
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2019-11-08 00:00:00 UTC
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Nasdaq 100 Movers: AAL, MNST
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AAL
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https://www.nasdaq.com/articles/nasdaq-100-movers%3A-aal-mnst-2019-11-08
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nan
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nan
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In early trading on Friday, shares of Monster Beverage topped the list of the day's best performing components of the Nasdaq 100 index, trading up 4.3%. Year to date, Monster Beverage registers a 20.0% gain.
And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 2.3%. American Airlines Group is lower by about 6.0% looking at the year to date performance.
Two other components making moves today are Western Digital, trading down 2.1%, and Booking Holdings, trading up 3.8% on the day.
VIDEO: Nasdaq 100 Movers: AAL, MNST
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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VIDEO: Nasdaq 100 Movers: AAL, MNST The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 2.3%. American Airlines Group is lower by about 6.0% looking at the year to date performance.
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VIDEO: Nasdaq 100 Movers: AAL, MNST The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Year to date, Monster Beverage registers a 20.0% gain. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 2.3%.
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VIDEO: Nasdaq 100 Movers: AAL, MNST The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Friday, shares of Monster Beverage topped the list of the day's best performing components of the Nasdaq 100 index, trading up 4.3%. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 2.3%.
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VIDEO: Nasdaq 100 Movers: AAL, MNST The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Friday, shares of Monster Beverage topped the list of the day's best performing components of the Nasdaq 100 index, trading up 4.3%. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 2.3%.
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6307.0
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2019-11-05 00:00:00 UTC
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American Airlines' Cost Trajectory May Be About to Improve
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AAL
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https://www.nasdaq.com/articles/american-airlines-cost-trajectory-may-be-about-to-improve-2019-11-05
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nan
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nan
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After briefly becoming one of the most profitable airlines in the world during 2015, American Airlines (NASDAQ: AAL) suffered severe margin erosion in the following years. A modest rebound in fuel costs drove some of this margin pressure, but rising nonfuel unit costs represented an even bigger headwind.
American Airlines' adjusted nonfuel unit costs came in at 9.4 cents in 2014. Based on American's 2018 cost performance and 2019 guidance, adjusted nonfuel unit costs will reach 11.5 cents this year. That would be up 22% compared to 2014, a compound annual growth rate of 4% over five years. (For comparison, most U.S. airlines try to limit annualized nonfuel unit cost growth to 2% or less.)
However, the Boeing (NYSE: BA) 737 MAX grounding has exacerbated American Airlines' unit cost inflation this year. The 737 MAX's return -- expected in early 2020 -- could spark a change for the better in American Airlines' unit cost trends over the next few years.
American Airlines' unit cost trajectory is set to improve starting in 2020. Image source: American Airlines.
On a journey to simplify the fleet
Fleet simplification has been the centerpiece of American Airlines' cost-cutting plans in recent years. Following the US Airways merger, American Airlines was operating too many aircraft types. Additionally, in many cases, it operated multiple subfleets of a particular model, adding to the complexity.
In a presentation earlier this year, management noted that it had reduced the number of subfleets from 52 to 42 between 2016 and 2018. It also set a goal of having just 30 subfleets by the end of 2022. This should reduce maintenance costs, improve pilot productivity, and limit disruption in the event of last-minute aircraft switches.
American Airlines took one big step toward fleet simplification in 2019, as it retired the last of its MD-80s in early September. However, there is a lot more on the way over the next several years. American Airlines plans to retire all 20 of its high-cost Embraer E190s in 2020. It began phasing out its last 24 Boeing 767s earlier this year and will retire all of them by the end of 2021. Finally, the carrier's recent order for 50 Airbus A321XLRs will pave the way for it to retire the rest of its Boeing 757s by 2024. American will likely retire its Airbus A330-300 fleet around the same time.
The A321XLR's arrival beginning in 2023 will allow American Airlines to retire the rest of its 757s. Image source: Airbus.
All of these retiring aircraft types will be replaced with new jets that are part of larger subfleets -- reducing complexity -- and have lower unit costs than the planes they are replacing.
Why the Boeing 737 MAX's return is the key
While retiring smaller and older subfleets is one key part of the simplification drive at American Airlines, the carrier also wants to reduce the number of distinct configurations among the aircraft types that remain. Most notably, after having introduced the Boeing 737 MAX 8 with a 172-seat configuration, American Airlines intends to reconfigure all of its 737-800s in the same 172-seat layout. The airline also plans to outfit most of its previous-generation A321s (excluding its 102-seat transcontinental subfleet) with 190 seats.
These moves should help reduce unit costs. American Airlines will increase seating capacity on the 737-800s by 7.5% while having a minimal impact on trip costs. The seat count change will be smaller for the A321s, but those modifications will also significantly increase the number of first-class and extra-legroom seats. In total, nearly 500 aircraft will be reconfigured -- roughly half of American's mainline fleet.
Unfortunately, the Boeing 737 MAX grounding has forced American Airlines to cancel more than 100 flights a day since the spring. In order to limit the number of cancellations -- particularly during the spring and summer peak seasons -- the carrier halted all of its retrofit programs earlier this year and kept the aircraft previously scheduled for modifications in service. As a result, it has completed just a small proportion of the planned retrofits so far: about 72 aircraft.
American Airlines recently restarted the retrofit program, taking advantage of seasonally weaker demand in the fall. Assuming the 737 MAX is ready for service again in the first quarter of 2020, the airline should be able to step up the pace of aircraft reconfigurations next year.
Good things in store
During American Airlines' recent Q3earnings call CFO Derek Kerr said that adjusted nonfuel unit costs would likely be roughly flat in 2020, excluding the potential impact of new labor deals. The nonfuel unit cost outlook for 2021 and 2022 seems quite benign as well, thanks to the tailwinds from American's fleet simplification efforts and the addition of more seats to its 737-800s and A321s.
American Airlines' fleet initiatives should also drive big fuel efficiency gains. Between now and the end of 2021, it will add approximately 100 next-generation narrow-body jets to its active fleet (assuming the return of the Boeing 737 MAX). It will also more than double its fleet of 787-8 Dreamliners to 42 jets as it completes the replacement of its aging 767s. The 737-800 and A321 retrofits will have a meaningful positive impact on fuel efficiency, too. Fuel efficiency could improve by 3% to 4% between 2019 and 2021.
The combination of better fuel efficiency and flattish nonfuel unit costs -- along with the carrier's existing revenue initiatives -- should help American improve its profit margin relative to its largest peers over the next few years. That may be enough to get the stock moving higher, given its low valuation today. That said, American Airlines probably needs more fundamental change to become an airline industry leader in terms of profitability once again.
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Adam Levine-Weinberg owns shares of Embraer and is long January 2020 $20 calls on American Airlines Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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After briefly becoming one of the most profitable airlines in the world during 2015, American Airlines (NASDAQ: AAL) suffered severe margin erosion in the following years. In order to limit the number of cancellations -- particularly during the spring and summer peak seasons -- the carrier halted all of its retrofit programs earlier this year and kept the aircraft previously scheduled for modifications in service. Good things in store During American Airlines' recent Q3earnings call CFO Derek Kerr said that adjusted nonfuel unit costs would likely be roughly flat in 2020, excluding the potential impact of new labor deals.
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After briefly becoming one of the most profitable airlines in the world during 2015, American Airlines (NASDAQ: AAL) suffered severe margin erosion in the following years. Why the Boeing 737 MAX's return is the key While retiring smaller and older subfleets is one key part of the simplification drive at American Airlines, the carrier also wants to reduce the number of distinct configurations among the aircraft types that remain. American Airlines' fleet initiatives should also drive big fuel efficiency gains.
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After briefly becoming one of the most profitable airlines in the world during 2015, American Airlines (NASDAQ: AAL) suffered severe margin erosion in the following years. However, the Boeing (NYSE: BA) 737 MAX grounding has exacerbated American Airlines' unit cost inflation this year. The 737 MAX's return -- expected in early 2020 -- could spark a change for the better in American Airlines' unit cost trends over the next few years.
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After briefly becoming one of the most profitable airlines in the world during 2015, American Airlines (NASDAQ: AAL) suffered severe margin erosion in the following years. Why the Boeing 737 MAX's return is the key While retiring smaller and older subfleets is one key part of the simplification drive at American Airlines, the carrier also wants to reduce the number of distinct configurations among the aircraft types that remain. These moves should help reduce unit costs.
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6308.0
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2019-11-04 00:00:00 UTC
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American Airlines Group, Inc. (AAL) Ex-Dividend Date Scheduled for November 05, 2019
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AAL
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https://www.nasdaq.com/articles/american-airlines-group-inc.-aal-ex-dividend-date-scheduled-for-november-05-2019-2019-11
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nan
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nan
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American Airlines Group, Inc. (AAL) will begin trading ex-dividend on November 05, 2019. A cash dividend payment of $0.1 per share is scheduled to be paid on November 20, 2019. Shareholders who purchased AAL prior to the ex-dividend date are eligible for the cash dividend payment. This marks the 22nd quarter that AAL has paid the same dividend. At the current stock price of $30.56, the dividend yield is 1.31%.
The previous trading day's last sale of AAL was $30.56, representing a -24.69% decrease from the 52 week high of $40.58 and a 26.12% increase over the 52 week low of $24.23.
AAL is a part of the Transportation sector, which includes companies such as FedEx Corporation (FDX) and Delta Air Lines, Inc. (DAL). AAL's current earnings per share, an indicator of a company's profitability, is $3.55. Zacks Investment Research reports AAL's forecasted earnings growth in 2019 as 8.83%, compared to an industry average of 3.9%.
For more information on the declaration, record and payment dates, visit the AAL Dividend History page. Our Dividend Calendar has the full list of stocks that have an ex-dividend today.
Interested in gaining exposure to AAL through an Exchange Traded Fund [ETF]?
The following ETF(s) have AAL as a top-10 holding:
Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE).
The top-performing ETF of this group is QQQE with an increase of 7.7% over the last 100 days.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Shareholders who purchased AAL prior to the ex-dividend date are eligible for the cash dividend payment. AAL is a part of the Transportation sector, which includes companies such as FedEx Corporation (FDX) and Delta Air Lines, Inc. (DAL). Zacks Investment Research reports AAL's forecasted earnings growth in 2019 as 8.83%, compared to an industry average of 3.9%.
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American Airlines Group, Inc. (AAL) will begin trading ex-dividend on November 05, 2019. Shareholders who purchased AAL prior to the ex-dividend date are eligible for the cash dividend payment. AAL's current earnings per share, an indicator of a company's profitability, is $3.55.
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Shareholders who purchased AAL prior to the ex-dividend date are eligible for the cash dividend payment. The previous trading day's last sale of AAL was $30.56, representing a -24.69% decrease from the 52 week high of $40.58 and a 26.12% increase over the 52 week low of $24.23. For more information on the declaration, record and payment dates, visit the AAL Dividend History page.
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AAL's current earnings per share, an indicator of a company's profitability, is $3.55. American Airlines Group, Inc. (AAL) will begin trading ex-dividend on November 05, 2019. Shareholders who purchased AAL prior to the ex-dividend date are eligible for the cash dividend payment.
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6309.0
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2019-11-01 00:00:00 UTC
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Cash Dividend On The Way From American Airlines Group (AAL)
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AAL
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https://www.nasdaq.com/articles/cash-dividend-on-the-way-from-american-airlines-group-aal-2019-11-01
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nan
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nan
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Looking at the universe of stocks we cover at Dividend Channel, on 11/5/19, American Airlines Group Inc (Symbol: AAL) will trade ex-dividend, for its quarterly dividend of $0.10, payable on 11/20/19. As a percentage of AAL's recent stock price of $30.41, this dividend works out to approximately 0.33%.
In general, dividends are not always predictable; but looking at the history above can help in judging whether the most recent dividend from AAL is likely to continue, and whether the current estimated yield of 1.32% on annualized basis is a reasonable expectation of annual yield going forward. The chart below shows the one year performance of AAL shares, versus its 200 day moving average:
Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $30.20.
In Friday trading, American Airlines Group Inc shares are currently up about 1.2% on the day.
Click here to learn which 25 S.A.F.E. dividend stocks should be on your radar screen »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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As a percentage of AAL's recent stock price of $30.41, this dividend works out to approximately 0.33%. In general, dividends are not always predictable; but looking at the history above can help in judging whether the most recent dividend from AAL is likely to continue, and whether the current estimated yield of 1.32% on annualized basis is a reasonable expectation of annual yield going forward. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $30.20.
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Looking at the universe of stocks we cover at Dividend Channel, on 11/5/19, American Airlines Group Inc (Symbol: AAL) will trade ex-dividend, for its quarterly dividend of $0.10, payable on 11/20/19. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $30.20. As a percentage of AAL's recent stock price of $30.41, this dividend works out to approximately 0.33%.
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Looking at the universe of stocks we cover at Dividend Channel, on 11/5/19, American Airlines Group Inc (Symbol: AAL) will trade ex-dividend, for its quarterly dividend of $0.10, payable on 11/20/19. In general, dividends are not always predictable; but looking at the history above can help in judging whether the most recent dividend from AAL is likely to continue, and whether the current estimated yield of 1.32% on annualized basis is a reasonable expectation of annual yield going forward. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $30.20.
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As a percentage of AAL's recent stock price of $30.41, this dividend works out to approximately 0.33%. In general, dividends are not always predictable; but looking at the history above can help in judging whether the most recent dividend from AAL is likely to continue, and whether the current estimated yield of 1.32% on annualized basis is a reasonable expectation of annual yield going forward. Looking at the universe of stocks we cover at Dividend Channel, on 11/5/19, American Airlines Group Inc (Symbol: AAL) will trade ex-dividend, for its quarterly dividend of $0.10, payable on 11/20/19.
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6310.0
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2019-10-31 00:00:00 UTC
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Notable Thursday Option Activity: LOW, AAL, EXAS
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AAL
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https://www.nasdaq.com/articles/notable-thursday-option-activity%3A-low-aal-exas-2019-10-31
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nan
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nan
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Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in Lowe's Companies Inc (Symbol: LOW), where a total of 15,413 contracts have traded so far, representing approximately 1.5 million underlying shares. That amounts to about 48.6% of LOW's average daily trading volume over the past month of 3.2 million shares. Particularly high volume was seen for the $100 strike put option expiring January 17, 2020, with 4,012 contracts trading so far today, representing approximately 401,200 underlying shares of LOW. Below is a chart showing LOW's trailing twelve month trading history, with the $100 strike highlighted in orange:
American Airlines Group Inc (Symbol: AAL) options are showing a volume of 39,588 contracts thus far today. That number of contracts represents approximately 4.0 million underlying shares, working out to a sizeable 48.4% of AAL's average daily trading volume over the past month, of 8.2 million shares. Particularly high volume was seen for the $34 strike call option expiring November 15, 2019, with 4,017 contracts trading so far today, representing approximately 401,700 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange:
And EXACT Sciences Corp. (Symbol: EXAS) options are showing a volume of 9,953 contracts thus far today. That number of contracts represents approximately 995,300 underlying shares, working out to a sizeable 47.5% of EXAS's average daily trading volume over the past month, of 2.1 million shares. Especially high volume was seen for the $82 strike put option expiring November 01, 2019, with 1,403 contracts trading so far today, representing approximately 140,300 underlying shares of EXAS. Below is a chart showing EXAS's trailing twelve month trading history, with the $82 strike highlighted in orange:
For the various different available expirations for LOW options, AAL options, or EXAS options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $34 strike call option expiring November 15, 2019, with 4,017 contracts trading so far today, representing approximately 401,700 underlying shares of AAL. Below is a chart showing LOW's trailing twelve month trading history, with the $100 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 39,588 contracts thus far today. That number of contracts represents approximately 4.0 million underlying shares, working out to a sizeable 48.4% of AAL's average daily trading volume over the past month, of 8.2 million shares.
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That number of contracts represents approximately 4.0 million underlying shares, working out to a sizeable 48.4% of AAL's average daily trading volume over the past month, of 8.2 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: And EXACT Sciences Corp. (Symbol: EXAS) options are showing a volume of 9,953 contracts thus far today. Below is a chart showing LOW's trailing twelve month trading history, with the $100 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 39,588 contracts thus far today.
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That number of contracts represents approximately 4.0 million underlying shares, working out to a sizeable 48.4% of AAL's average daily trading volume over the past month, of 8.2 million shares. Below is a chart showing EXAS's trailing twelve month trading history, with the $82 strike highlighted in orange: For the various different available expirations for LOW options, AAL options, or EXAS options, visit StockOptionsChannel.com. Below is a chart showing LOW's trailing twelve month trading history, with the $100 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 39,588 contracts thus far today.
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Particularly high volume was seen for the $34 strike call option expiring November 15, 2019, with 4,017 contracts trading so far today, representing approximately 401,700 underlying shares of AAL. Below is a chart showing EXAS's trailing twelve month trading history, with the $82 strike highlighted in orange: For the various different available expirations for LOW options, AAL options, or EXAS options, visit StockOptionsChannel.com. Below is a chart showing LOW's trailing twelve month trading history, with the $100 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 39,588 contracts thus far today.
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6311.0
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2019-10-31 00:00:00 UTC
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Implied RPV Analyst Target Price: $73
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AAL
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https://www.nasdaq.com/articles/implied-rpv-analyst-target-price%3A-%2473-2019-10-31
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nan
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nan
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Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the Invesco S&P 500— Pure Value ETF (Symbol: RPV), we found that the implied analyst target price for the ETF based upon its underlying holdings is $73.10 per unit.
With RPV trading at a recent price near $65.94 per unit, that means that analysts see 10.86% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of RPV's underlying holdings with notable upside to their analyst target prices are American Airlines Group Inc (Symbol: AAL), Norwegian Cruise Line Holdings Ltd (Symbol: NCLH), and General Motors Co (Symbol: GM). Although AAL has traded at a recent price of $30.29/share, the average analyst target is 27.74% higher at $38.69/share. Similarly, NCLH has 26.83% upside from the recent share price of $51.19 if the average analyst target price of $64.92/share is reached, and analysts on average are expecting GM to reach a target price of $48.00/share, which is 26.62% above the recent price of $37.91. Below is a twelve month price history chart comparing the stock performance of AAL, NCLH, and GM:
Below is a summary table of the current analyst target prices discussed above:
Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.
10 ETFs With Most Upside To Analyst Targets »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Although AAL has traded at a recent price of $30.29/share, the average analyst target is 27.74% higher at $38.69/share. Below is a twelve month price history chart comparing the stock performance of AAL, NCLH, and GM: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Three of RPV's underlying holdings with notable upside to their analyst target prices are American Airlines Group Inc (Symbol: AAL), Norwegian Cruise Line Holdings Ltd (Symbol: NCLH), and General Motors Co (Symbol: GM).
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Three of RPV's underlying holdings with notable upside to their analyst target prices are American Airlines Group Inc (Symbol: AAL), Norwegian Cruise Line Holdings Ltd (Symbol: NCLH), and General Motors Co (Symbol: GM). Although AAL has traded at a recent price of $30.29/share, the average analyst target is 27.74% higher at $38.69/share. Below is a twelve month price history chart comparing the stock performance of AAL, NCLH, and GM: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now?
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Below is a twelve month price history chart comparing the stock performance of AAL, NCLH, and GM: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Three of RPV's underlying holdings with notable upside to their analyst target prices are American Airlines Group Inc (Symbol: AAL), Norwegian Cruise Line Holdings Ltd (Symbol: NCLH), and General Motors Co (Symbol: GM). Although AAL has traded at a recent price of $30.29/share, the average analyst target is 27.74% higher at $38.69/share.
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Although AAL has traded at a recent price of $30.29/share, the average analyst target is 27.74% higher at $38.69/share. Three of RPV's underlying holdings with notable upside to their analyst target prices are American Airlines Group Inc (Symbol: AAL), Norwegian Cruise Line Holdings Ltd (Symbol: NCLH), and General Motors Co (Symbol: GM). Below is a twelve month price history chart comparing the stock performance of AAL, NCLH, and GM: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now?
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6312.0
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2019-10-31 00:00:00 UTC
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A Quick Look At How JetBlue’s Operational Capacity Is Distributed Across Its U.S. Hubs
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AAL
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https://www.nasdaq.com/articles/a-quick-look-at-how-jetblues-operational-capacity-is-distributed-across-its-u.s.-hubs-2019
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JetBlue Airways (NASDAQ: JBLU) reported a better-than-expected performance for the third quarter recently, with improved expense trends more than making up for a slight reduction in per unit revenues for the sixth-largest airline in the U.S. (in terms of available seat miles). In 2018, the company served 42 million customers and operated 1,000 daily flights across 105 destinations. In the interactive dashboard on JetBlue’s Revenues, Trefis highlights trends in key revenue drivers along-with the expectations for full-year 2019 as well as 2020.
JetBlue operates fights from six key cities: New York, Boston, Orlando, Los Angeles, San Juan, and Fort Lauderdale. These citites act as the airline’s operational hubs. All JetBlue flights either originate or land at one of these cities.
Half of JetBlue’s flights have the New York metropolitan area as their origin or destination. This would explain why the company is known as New York’s Hometown Airline.
In New York, JetBlue primarily operates through JFK and caters to a staggering 37% of the airport’s domestic seating capacity.
JetBlue is also the largest carrier at the Logan International Airport in Boston, and commands nearly a third of the city’s combined airport capacity.
By 2021, the company targets 200 flights per day from Boston and plans to increase the number of operational gates to 30.
JetBlue’s strong presence at San Juan, Puerto Rico, acts as the airline’s base for flights to and from the Caribbean and Latin America.
Fort Lauderdale, an alternative to Miami International Airport, is JetBlue’s fastest-growing hub.
Over recent years, Fort Lauderdale has become an important access point for JetBlue flights to the Caribbean and Latin America.
Orlando and Los Angeles are other hubs in JetBlue’s route structure.
Details about how JetBlue’s capacity is distributed across these hubs is available in our interactive dashboard, along with an overview of how JetBlue’s revenues have trended over recent years.
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Like our charts? Explore example interactive dashboards and create your own
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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JetBlue Airways (NASDAQ: JBLU) reported a better-than-expected performance for the third quarter recently, with improved expense trends more than making up for a slight reduction in per unit revenues for the sixth-largest airline in the U.S. (in terms of available seat miles). JetBlue operates fights from six key cities: New York, Boston, Orlando, Los Angeles, San Juan, and Fort Lauderdale. JetBlue’s strong presence at San Juan, Puerto Rico, acts as the airline’s base for flights to and from the Caribbean and Latin America.
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In the interactive dashboard on JetBlue’s Revenues, Trefis highlights trends in key revenue drivers along-with the expectations for full-year 2019 as well as 2020. JetBlue operates fights from six key cities: New York, Boston, Orlando, Los Angeles, San Juan, and Fort Lauderdale. Over recent years, Fort Lauderdale has become an important access point for JetBlue flights to the Caribbean and Latin America.
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In the interactive dashboard on JetBlue’s Revenues, Trefis highlights trends in key revenue drivers along-with the expectations for full-year 2019 as well as 2020. JetBlue operates fights from six key cities: New York, Boston, Orlando, Los Angeles, San Juan, and Fort Lauderdale. Details about how JetBlue’s capacity is distributed across these hubs is available in our interactive dashboard, along with an overview of how JetBlue’s revenues have trended over recent years.
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In 2018, the company served 42 million customers and operated 1,000 daily flights across 105 destinations. JetBlue operates fights from six key cities: New York, Boston, Orlando, Los Angeles, San Juan, and Fort Lauderdale. JetBlue is also the largest carrier at the Logan International Airport in Boston, and commands nearly a third of the city’s combined airport capacity.
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6313.0
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2019-10-29 00:00:00 UTC
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Tuesday 10/29 Insider Buying Report: BRP, AAL
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AAL
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https://www.nasdaq.com/articles/tuesday-10-29-insider-buying-report%3A-brp-aal-2019-10-29
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nan
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As the saying goes, there are many possible reasons for an insider to sell a stock, but only one reason to buy — they expect to make money. So let's look at two noteworthy recent insider buys.
At BRP Group (BRP), a filing with the SEC revealed that on Monday, Joseph D. Finney purchased 35,000 shares of BRP, for a cost of $14.00 each, for a total investment of $490,000. Finney was up about 14.1% on the buy at the high point of today's trading session, with BRP trading as high as $15.98 at last check today. BRP Group is trading down about 0.8% on the day Tuesday. This buy marks the first one filed by Finney in the past twelve months.
And also on Monday, Director James F. Albaugh purchased $314,070 worth of American Airlines Group (AAL), purchasing 10,000 shares at a cost of $31.41 a piece. This buy marks the first one filed by Albaugh in the past twelve months. American Airlines Group is trading down about 0.8% on the day Tuesday.
VIDEO: Tuesday 10/29 Insider Buying Report: BRP, AAL
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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VIDEO: Tuesday 10/29 Insider Buying Report: BRP, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. And also on Monday, Director James F. Albaugh purchased $314,070 worth of American Airlines Group (AAL), purchasing 10,000 shares at a cost of $31.41 a piece. This buy marks the first one filed by Finney in the past twelve months.
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And also on Monday, Director James F. Albaugh purchased $314,070 worth of American Airlines Group (AAL), purchasing 10,000 shares at a cost of $31.41 a piece. VIDEO: Tuesday 10/29 Insider Buying Report: BRP, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. This buy marks the first one filed by Finney in the past twelve months.
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VIDEO: Tuesday 10/29 Insider Buying Report: BRP, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. And also on Monday, Director James F. Albaugh purchased $314,070 worth of American Airlines Group (AAL), purchasing 10,000 shares at a cost of $31.41 a piece. At BRP Group (BRP), a filing with the SEC revealed that on Monday, Joseph D. Finney purchased 35,000 shares of BRP, for a cost of $14.00 each, for a total investment of $490,000.
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And also on Monday, Director James F. Albaugh purchased $314,070 worth of American Airlines Group (AAL), purchasing 10,000 shares at a cost of $31.41 a piece. VIDEO: Tuesday 10/29 Insider Buying Report: BRP, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. At BRP Group (BRP), a filing with the SEC revealed that on Monday, Joseph D. Finney purchased 35,000 shares of BRP, for a cost of $14.00 each, for a total investment of $490,000.
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6314.0
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2019-10-28 00:00:00 UTC
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American Airlines Group Breaks Above 200-Day Moving Average - Bullish for AAL
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AAL
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https://www.nasdaq.com/articles/american-airlines-group-breaks-above-200-day-moving-average-bullish-for-aal-2019-10-28
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In trading on Monday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $31.27, changing hands as high as $31.52 per share. American Airlines Group Inc shares are currently trading up about 1.8% on the day. The chart below shows the one year performance of AAL shares, versus its 200 day moving average:
Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $31.48.
Click here to find out which 9 other stocks recently crossed above their 200 day moving average »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Monday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $31.27, changing hands as high as $31.52 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $31.48. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Monday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $31.27, changing hands as high as $31.52 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $31.48. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Monday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $31.27, changing hands as high as $31.52 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $31.48. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Monday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $31.27, changing hands as high as $31.52 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $24.23 per share, with $40.58 as the 52 week high point — that compares with a last trade of $31.48. American Airlines Group Inc shares are currently trading up about 1.8% on the day.
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6315.0
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2019-10-28 00:00:00 UTC
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American Airlines Earnings: Profit Rises Despite 737 MAX Headwinds
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AAL
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https://www.nasdaq.com/articles/american-airlines-earnings%3A-profit-rises-despite-737-max-headwinds-2019-10-28
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American Airlines' (NASDAQ: AAL) plan to achieve a step change in profitability in 2019 was dashed earlier this year, because of the grounding of the Boeing (NYSE: BA) 737 MAX. A spike in flight cancellations during the spring and summer -- related to an alleged slowdown by the company's mechanics -- also negatively affected the airline's profitability.
These factors continued to weigh on American's earnings last quarter. Nevertheless, the airline was able to achieve double-digit growth in adjusted earnings per share, thanks to a combination of solid unit revenue growth and lower fuel prices. And with the 737 MAX likely to return in early 2020, American Airlines should be able to maintain its earnings momentum next year.
Solid improvement in the third quarter
In the third quarter, American Airlines increased its capacity just 1% year over year, as the grounding of its 24 Boeing 737 MAX 8s forced it to trim its flight schedule. Revenue per available seat mile (RASM) rose 2% year over year. That matched the midpoint of the company's updated forecast but was near the high end of the guidance range it published in late July.
Meanwhile, adjusted nonfuel unit costs rose 4.8%, in part because of the airline's slower-than-planned capacity growth. Fortunately, American's average fuel price declined to $2.05 per gallon from $2.30 a year earlier, offsetting most of the nonfuel cost pressure.
The net result was that revenue reached $11.9 billion -- up 3% year over year -- and adjusted pre-tax margin improved to 7% from 6.2% in Q3 2018. That drove a 16% increase in adjusted pre-tax income, to $835 million. Share buybacks added to American's EPS momentum, causing adjusted EPS to surge nearly 20% to $1.42, just ahead of the average analyst estimate of $1.39.
American Airlines' adjusted EPS rose by nearly 20% last quarter. Image source: American Airlines.
The Boeing 737 MAX grounding reduced pre-tax profit by about $140 million last quarter, according to the company. That implies that American Airlines could have achieved 35% pre-tax income growth in the third quarter, absent fleet constraints.
The Q4 outlook is a little shakier
Looking ahead to the fourth quarter, earnings growth may slow. RASM is on track to rise 0% to 2%, compared with a 2% to 4% increase in adjusted nonfuel unit costs. Once again, moderating fuel prices should offset most of the nonfuel cost headwind.
Based on all of these factors, American Airlines expects to report an adjusted pre-tax margin between 5% and 7% for the fourth quarter. In the year-ago period, it posted a 5.8% adjusted pre-tax margin. If American's results reach the high end of its guidance range, the carrier would sustain a double-digit earnings growth rate this quarter. By contrast, the low end of the range would imply an earnings decline. Thus, there is a good deal of uncertainty baked into the company's forecast.
With the Boeing 737 MAX now out of service until January at the earliest, American Airlines reduced the high end of its full-year earnings guidance. Its official forecast now calls for adjusted EPS between $4.50 and $5.50, compared with $4.55 in 2018, and the final result is likely to come in quite close to the $5.00 mark.
2020 looks like it will be a much better year
While American Airlines is on track to post modest earnings growth in 2019 on a full-year basis, its results still lag those of its main rivals in the airline industry. It will take time to address all the factors behind this underperformance, but American has a good chance to make meaningful headway next year.
Assuming that the Boeing 737 MAX does return early in the year, American Airlines plans to expand capacity by about 5% in 2020. That will enable it to hold nonfuel unit costs roughly flat, excluding the impacts of any new labor deals. The reintroduction of the 737 MAX will also boost fuel efficiency.
This uptick in capacity growth is consistent with continued unit revenue growth. Notably, a lot of American's growth will come at its two largest hubs -- Dallas-Fort Worth and Charlotte, where the carrier earns above-average margins. In addition, American Airlines will cancel most of its flights to Tokyo's Narita Airport by the end of the first quarter, replacing them with two new daily flights to Haneda Airport, which is more centrally located -- and thus more popular with business travelers.
There will always be potential pitfalls that American Airlines will need to avoid. The airline's recent track record in this respect is quite poor. However, American has enough positive catalysts for 2020 that investors can be fairly optimistic about its prospects for the year ahead.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg is long January 2020 $20 calls on American Airlines Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines' (NASDAQ: AAL) plan to achieve a step change in profitability in 2019 was dashed earlier this year, because of the grounding of the Boeing (NYSE: BA) 737 MAX. A spike in flight cancellations during the spring and summer -- related to an alleged slowdown by the company's mechanics -- also negatively affected the airline's profitability. If American's results reach the high end of its guidance range, the carrier would sustain a double-digit earnings growth rate this quarter.
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American Airlines' (NASDAQ: AAL) plan to achieve a step change in profitability in 2019 was dashed earlier this year, because of the grounding of the Boeing (NYSE: BA) 737 MAX. Solid improvement in the third quarter In the third quarter, American Airlines increased its capacity just 1% year over year, as the grounding of its 24 Boeing 737 MAX 8s forced it to trim its flight schedule. If American's results reach the high end of its guidance range, the carrier would sustain a double-digit earnings growth rate this quarter.
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American Airlines' (NASDAQ: AAL) plan to achieve a step change in profitability in 2019 was dashed earlier this year, because of the grounding of the Boeing (NYSE: BA) 737 MAX. Nevertheless, the airline was able to achieve double-digit growth in adjusted earnings per share, thanks to a combination of solid unit revenue growth and lower fuel prices. Solid improvement in the third quarter In the third quarter, American Airlines increased its capacity just 1% year over year, as the grounding of its 24 Boeing 737 MAX 8s forced it to trim its flight schedule.
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American Airlines' (NASDAQ: AAL) plan to achieve a step change in profitability in 2019 was dashed earlier this year, because of the grounding of the Boeing (NYSE: BA) 737 MAX. Solid improvement in the third quarter In the third quarter, American Airlines increased its capacity just 1% year over year, as the grounding of its 24 Boeing 737 MAX 8s forced it to trim its flight schedule. The Boeing 737 MAX grounding reduced pre-tax profit by about $140 million last quarter, according to the company.
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6316.0
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2019-10-25 00:00:00 UTC
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Airlines Seek Damages For 737 Max Grounding
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AAL
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https://www.nasdaq.com/articles/airlines-seek-damages-for-737-max-grounding-2019-10-25
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(RTTNews) - Airlines that are major customers of the Boeing 737 Max aircraft are taking a financial hit from the grounding of the aircraft earlier this year and are now seeking compensation from Boeing for the damages.
Boeing too has been reeling under the impact of the two crashes related to the 737 Max, Boeing's best-selling aircraft. The aircraft were grounded by airlines worldwide earlier this year following two deadly crashes that killed a total of 346 people.
On Thursday, Southwest Airlines reported record third-quarter net income of $659 million, but said it incurred a $210 million reduction in operating income due to the continued grounding of the 737 Max aircraft.
Southwest CEO Gary Kelly said, "We are engaged in ongoing discussions with the Boeing Company regarding compensation for damages related to the MAX groundings. The operating income reduction from the MAX groundings is estimated to be $435 million for the nine months ended September 30, 2019, and we expect the damages to continue to grow into 2020."
American Airlines on Thursday reported an increase in its third-quarter net income to $425 million, but noted that its results were impacted by the continued grounding of the Boeing 737 MAX and a labor dispute.
The airline said it cancelled 9,475 flights in the quarter due to the grounding of the 737 aircraft and estimates that the cancellations negatively impacted its pre-tax income by about $140 million.
With the flight cancellations extending through the remainder of 2019, American Airlines now expects the MAX cancellations will negatively impact its full-year 2019 pre-tax income by about $540 million.
American Airlines CEO Doug Parker reportedly said on the third-quarterearnings conference callthat the airline is working to ensure Boeing shareholders will bear the cost of Boeing's failures, and not American Airlines shareholders.
In response to a final investigation report of Lion Air Flight 610 by Indonesia's National Transportation Safety Committee or KNKT, Boeing said Friday it is addressing the KNKT's safety recommendations and taking steps to enhance the safety of the 737 Max so as to prevent the flight control conditions that occurred in the accident from ever happening again.
The Indonesian investigators reportedly found that faults by Boeing, Lion Air and the pilots led to the crash of the Lion Air Boeing 737 Max in October 2018, which killed all 189 people on board.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Southwest CEO Gary Kelly said, "We are engaged in ongoing discussions with the Boeing Company regarding compensation for damages related to the MAX groundings. The operating income reduction from the MAX groundings is estimated to be $435 million for the nine months ended September 30, 2019, and we expect the damages to continue to grow into 2020." American Airlines on Thursday reported an increase in its third-quarter net income to $425 million, but noted that its results were impacted by the continued grounding of the Boeing 737 MAX and a labor dispute.
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On Thursday, Southwest Airlines reported record third-quarter net income of $659 million, but said it incurred a $210 million reduction in operating income due to the continued grounding of the 737 Max aircraft. The airline said it cancelled 9,475 flights in the quarter due to the grounding of the 737 aircraft and estimates that the cancellations negatively impacted its pre-tax income by about $140 million. With the flight cancellations extending through the remainder of 2019, American Airlines now expects the MAX cancellations will negatively impact its full-year 2019 pre-tax income by about $540 million.
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(RTTNews) - Airlines that are major customers of the Boeing 737 Max aircraft are taking a financial hit from the grounding of the aircraft earlier this year and are now seeking compensation from Boeing for the damages. On Thursday, Southwest Airlines reported record third-quarter net income of $659 million, but said it incurred a $210 million reduction in operating income due to the continued grounding of the 737 Max aircraft. American Airlines on Thursday reported an increase in its third-quarter net income to $425 million, but noted that its results were impacted by the continued grounding of the Boeing 737 MAX and a labor dispute.
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(RTTNews) - Airlines that are major customers of the Boeing 737 Max aircraft are taking a financial hit from the grounding of the aircraft earlier this year and are now seeking compensation from Boeing for the damages. The operating income reduction from the MAX groundings is estimated to be $435 million for the nine months ended September 30, 2019, and we expect the damages to continue to grow into 2020." American Airlines on Thursday reported an increase in its third-quarter net income to $425 million, but noted that its results were impacted by the continued grounding of the Boeing 737 MAX and a labor dispute.
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6317.0
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2019-10-25 00:00:00 UTC
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American Airlines Group (AAL) Q3 2019 Earnings Call Transcript
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AAL
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https://www.nasdaq.com/articles/american-airlines-group-aal-q3-2019-earnings-call-transcript-2019-10-25
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Image source: The Motley Fool.
American Airlines Group (NASDAQ: AAL)
Q3 2019 Earnings Call
Oct 24, 2019, 8:30 a.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the third-quarter 2019 American Airlines Group Inc.earnings conference call [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your speaker today, Mr.
Dan Cravens. Sir, you may begin.
Dan Cravens -- Managing Director of Investor Relations
Thank you, and good morning, everyone, and welcome to the American Airlines Group third-quarter 2019earnings conference call With us in the room this morning is Doug Parker, chairman and CEO; Robert Isom, president; and Derek Kerr, our chief financial officer. Also in the room for our question-and-answer session are several of our seniors execs, including Maya Leibman, our chief information officer; Steve Johnson, our EVP of corporate affairs; Elise Eberwein, our EVP of people and communications; Don Casey, our senior vice president of revenue management; as well as Vasu Raja, our senior vice president of network strategy. Like we normally do, Doug will start the call with an overview of our financial results.
Robert will then follow with commentary on operational performance and our commercial activities for 2019 and 2020. Derek will then walk us through the details on the third quarter and provide us some additional information on our guidance for the remainder of the year and some preliminary guidance for 2020. And then after we hear from those comments, we'll open the call for analyst questions and, lastly, questions from the media. [Operator instructions] Before we begin, we must state that today's call does contain forward-looking statements, including statements concerning future revenues and costs, forecast of capacity traffic, load factor, fleet plans and fuel prices.
10 stocks we like better than American Airlines Group
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
These statements represent our predictions and expectations as to future events, but numerous risks and uncertainties could cause actual results to differ from those projected. Information about some of these risks and uncertainties can be found in our earnings press release issued this morning and our Form 10-Q for the quarter ended September 30, 2019. In addition, we will be discussing certain non-GAAP financial measures this morning, such as pre-tax profit and CASM, excluding unusual items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings release and that can be found in the Investor Relations section of our website.
A webcast of this call will also be archived on the website. The information that we're giving you on the call is as of today's date, and we undertake no obligation to update the information subsequently. So thanks again for joining us this morning. At this point, I'll turn the call over to our chairman and CEO, Doug Parker.
Doug Parker -- Chairman and Chief Executive Officer
Thanks, Dan. Good morning, everybody. Thanks for joining us. Today, we announced pre-tax earnings, excluding special items, of $835 million or $1.42 per share.
That's a 60% increase in year-over-year pre-tax earnings and a 20% increase in EPS. But we know these earnings and the increase in earnings should have been even better. Our third-quarter results reflect two major challenges that impacted our business. First, the 737 MAX fleet remained grounded throughout the quarter for us, negatively impacting our pre-tax earnings by an estimated $140 million in this quarter alone.
Second, we had significant operational challenges in American in the first half of the quarter as we continue to work on negotiating an industry-leading contract we want for our TWU and IAM team members. As it relates to the 737 MAX, that situation is of course ongoing. We have two goals for the MAX. First, of course, is for Boeing to complete the FAA's required recertification process and ensure the aircraft is safely flying in.
The second is to ensure that American is compensated for the loss revenue that the MAX grounding has caused, the missed deadlines and extended grounding for our customers, our team members and our shareholders. So we're working to ensure that Boeing shareholders bear the cost of Boeing's failures, not American Airlines' shareholders. Turning now to our second main challenge, the TWU/IAM contract. We've seen significant improvements in our operational reliability as our negotiations have resumed.
We've been on mediated talks through the National Mediation Board since early September. Those are our first talks since April, and both parties have agreed not to discuss the content of those talks publicly at the request of NMB. But you should know that we're very focused on reaching an agreement, which is fair to all involved and ensures our operation is back on track. Now we recognize that beyond these two factors, the status quo is not an option.
We're committed to urgently improving performance and enhancing shareholder value. We've long talked about building the trust of our stakeholders and creating value for the long term, but we also appreciate that, in many respects, the long term is not. We know we need to do better, and we will. As we're nearing the end of 2019, we're committed to deliver on three key areas that will create value for our shareholders in 2020: operational excellence; efficient and profitable growth; and significant free cash flow generation.
I'll talk a bit about each of those. First and foremost, we must restore American's operational reliability to the standards of excellence that our customers and our team members deserve. Importantly, we believe the issues that impacted our operations for much of the summer are now behind us. We had an excellent September and that performance has continued into October.
But two months don't make a trend, and we won't rely entirely on our recent performance or our forward confidence. As Robert will discuss in more detail, we're executing on specific plans to improve our operating reliability beyond reaching a labor agreement and specific goals that we will meet. We simply will not allow our customers and team members to experience another period like this past summer again. Second, we're going to grow American's network in 2020 by approximately 5% through efficient and profitable growth.
We anticipate much of this growth will be added at or above system average unit revenues because it's driven by gates we've been able to acquire in Dallas/Fort Worth and Charlotte. These are two of our highest margin hubs. And as we've already experienced in DFW this year, routes that are added into this large connecting hub operations immediately produced unit revenues in excess of our systemwide average. And it will be efficient growth.
For example, many of the costs of our 737 MAX aircraft are already on our cost structure. Our operational reliability improvements will also drive some of the growth, and these improvements increase flying and reduce cost. Combining those factors with our previously announced cost initiatives give us confidence that our above-average RASM growth will be added at below-average incremental unit cost. Derek will provide some high-level CASM estimates in his remarks and will provide more specific details on the fourth-quarter call once we complete our budgeting process.
But just know, we're excited about our prospects to grow and to grow efficiently and profitably in 2020. Lastly, and importantly, we are confident we will begin to produce significant free cash flow for our investors in 2020 and beyond. Much of that confidence is driven by the earnings improvement we expect from the first two I've just discussed, and we expect those initiatives to improve profitability over where it would be otherwise. At the same time that's happening, we are reaching the end of an unprecedented program to invest capital into American Airlines.
The $30 billion in investments we've made over the past six years have been necessary to integrate and upgrade two airlines that have suffered a lack of investment and, most importantly, to modernize an aging fleet. That work is now done, and we anticipate our capex requirements will fall from the over $5 billion per year average over the past six years to $3.7 billion in 2020, $2.1 billion in 2021 and should average approximately $3 billion thereafter. What that means for our investors is if our estimated 2019 earnings are unchanged in both '20 and '21, and this is not an earnings forecast, just an earnings constant analysis, that our free cash flow would be approximately $2.5 billion in 2020 and $3 billion in 2021. That's $5.5 billion in free cash flow in just two years at a company that has a current market capitalization of approximately $12.5 billion or a 44% free cash flow yield over just two years.
And again, that's on constant 2019 earnings. None of us will be pleased with constant 2019 earnings in 2020 and 2021. So as we said in the past, as we generate that significant free cash flow, we will naturally delever our balance sheet. We'll repay debt as it comes due, and the need to raise new debt to finance new aircraft will now be much lower.
We anticipate that decline in adjusted debt will be significant. We expect adjusted net debt will fall by approximately $3 billion to $4 billion in the next two years and by $8 billion to $10 billion over the next five years. And we will, of course, continue to return cash in excess of our needs to our shareholders. Entering a period of significant free cash flow generation will facilitate that initiative.
So in summary, we're pleased the two large issues that have impacted our performance should be addressed as we enter 2020, but we are not of the view that correcting those two items alone are sufficient for our customers, our team members or our shareholders. As it relates to our shareholders, for example, we know we have a profitability margin gap versus our large competitor, and we're committed to narrow that gap in 2020 and beyond. We're excited about our prospects for the future and are grateful to the 130,000 hardworking team members of American Airlines and the amazingly great work they do every day to take care of our customers. With that, I'll turn it over to Robert Isom.
Robert Isom -- President
Thanks, Doug, and good morning, everyone. Before I begin, I'll add my thanks to our team members for doing a great job of taking care of millions of customers during the busy summer travel period. Their hard work was instrumental in our ability to generate record revenue in the third quarter and grow margins, despite the challenges that Doug highlighted. Importantly, we continue to execute on a number of initiatives to improve the trajectory of our business going forward.
As we look at our business, the economy is strong, and the demand for our product remains robust. And we look forward to a strong holiday season. We reported another quarterly record with third-quarter revenue of $11.9 billion, 3% higher than the third quarter of 2018. This also marks the 12th consecutive quarter of unit revenue growth, and we expect to produce our 13th next quarter.
Derek will talk more about the revenue environment in his remarks. Global sale and distribution continue to win in the marketplace. During the quarter, corporate revenue outgrew -- outpaced system revenue growth on healthy corporate demand, a great result given our operational challenges. As we look at our operations, we have already seen a significant improvement in our operating reliability.
Since June, we have seen consistent month-over-month improvement. And for the full third quarter, our on-time metrics improved at both our mainline and regional operations. In fact, our September on-time arrival performance or A14 was the seventh best most in American's history and our best A14 performance since November of 2017. As Doug mentioned, this improvement continues into October.
We continue to strengthen our operations with ongoing enhancements, including retiring older aircraft, simplifying our fleet and schedule and fortifying our maintenance and airport resources. Our underlying execution is solid, and we are committed to returning American to a position of operational excellence. And as a result, we expect our 2020 completion factor to increase by 1 to 2 percentage points and a significant improvement in all reliability metrics, including on-time performance, baggage handling and customer satisfaction. We know we can't allow customers and our team members to experience another period like this past summer ever again.
So if for some unforeseen events in 2020 lead us to question our ability to meet our reliability standards, we will reduce our schedule rather than let our operations become the buffer. We don't believe that will be required, of course, but we also know it's a commitment we need to make to ensure that we restore operational excellence. Now with respect to the MAX, we have extended the cancel -- our cancellations through January 15. We continue to work closely with the FAA and Boeing.
They have built flexibility into that date. Regardless of when the aircraft is recertified, we plan to be prudent as we reintroduce the MAX back into our network. Before it begins commercial service, we will continue our collaboration with the APA and APFA, accomplish training and conduct multiple flights with our pilots, flight crews, executives and other team members to make sure that we are all comfortable that the aircraft is ready for our customers. And only then will we gradually place the aircraft back into our schedule.
As part of our phased approach to reintroducing the 24 MAX aircraft that we have in storage today, we'll begin with five aircraft flying in the first two weeks. That's 20 departures per day. Two weeks later, we'll add 12 more aircraft. The remaining seven will be phased in to service two weeks after that.
And we'll add additional MAX aircraft as they become available. And note, by year-end 2020, we have planned to take delivery of an additional 26 MAX aircraft for a total of 50 in our fleet. While 10 of those 26 aircraft have been built, we don't know exactly when they'll be delivered or when the remainder will be built. Restoration of operating reliability will drive customer satisfaction, but there's much, much more that we're doing to make the journey more efficient, easier and more enjoyable for our customers.
In fact, here are several enhancements that we launched in the third quarter, which demonstrate a steady and consistent focus on improving the customer experience. First off, we put -- we've added rich digital content, which has helped drive a 25% year-on-year improvement in premium economy ticket sales on aa.com. We've created unique opportunities for our customers to upsell into the premium cabin, thereby significantly growing its ancillary revenue. An improved system that makes it easier for families to secure seats together has been added.
And we've recently launched board now notification to reduce the wait time at gates for customers. And we're seeing customers boarding through biometrics -- a biometric boarding at CFW for international departures. And when there are disruptions, we've added the ability for customers to change flights or receive compensation before traveling to the airport. And we've automated hotel, meal and transportation vouchers delivered electronically to customers during disruptions.
The steady stream of customer-focused deliveries provide better experience for our customers, for our team members and certainly better results for our shareholders. We have a pipeline of additional customer-friendly features that we expect to launch in 2020. The foundation of customer preference begins with our network. We continue to be extremely excited after seeing the results from our network expansion plans, with growth targeted on our most profitable hubs.
This effort began in May where we added 100 daily departures out of our DFW hub. With nearly two full quarters under our belt, the results have exceeded our initial expectations. During the third quarter, we grew domestic capacity at DFW by 9% and produced PRASM growth at the hub of 3.5%. This is the largest capacity expansion at any company in the United States in more than a decade and set the stage for additional planned expansion next year in Charlotte and at Reagan National in 2021.
On partnership side, right in the quarter, LATAM notified us of their intention to leave the oneworld alliance and a formal relationship with Delta. While that's disappointing, but not surprising given the regulatory challenge our proposed joint venture face. Our vast South American network will ensure that we recapture the majority of the potential co-share revenue on our own aircraft. And that's already proving to be the case.
There has been no revenue impact since the announcement. American remains the largest U.S. carrier to Latin and South America, and we're committed to providing the best service to the region for our customers. Recently, we announced additional frequencies between Miami and Lima, São Paulo and Santiago.
And we're confident that with the strength of our network, we'll attract other partners to -- in the region. In the Pacific where we're quickly to realize the opportunities provided by our new joint business agreement with Qantas. It was approved by the DOT in July. This agreement allows for commercial integration between American and Qantas, delivering new routes and, ultimately, significant customer benefits, including more seamless integration when traveling on the American and Qantas networks.
So in conclusion, we have a great foundation built, and our core business is strong. We made investments to improve the product. Our fleet renewal is -- program is near completion, and we continue to refine our network to add margin accretive growth. We're confident that we'll deliver improved results in 2020 and beyond to benefit our shareholders, our customers and team members.
And with that, I'll turn it over to Derek.
Derek Kerr -- Chief Financial Officer
Thanks, Robert, and good morning, everyone. During the quarter, we were able to grow our both pre-tax margin and earnings per share for the second successive quarter. Our third-quarter results came in toward the high end of the guidance range we provided in July. For the third quarter, our pre-tax profit, excluding net special items, was $835 million, resulting in a pre-tax margin excluding special items of 7%, compared to 6.2% in 2018.
Our third-quarter 2019 pre-tax net profit, excluding net special items, was $630 million, a 15% increase over the third quarter of 2018. And our diluted earnings per share, excluding net special items in the third quarter, was $1.42 per share, up 20% or -- from $1.19 per diluted share in the third quarter of 2018. As Robert mentioned, the revenue environment remains strong, with third-quarter top-line growth of 3%. Passenger revenues grew by 4.1% to $11 billion, a record for the third quarter.
Latin was the best-performing entity during the third quarter, with year-over-year unit revenue improvement of 5.6% -- 5.9%. Brazil and Mexico led the way with double-digit improvements in yield, while we improve load factor in the entity overall by 6.5 points. Pacific unit revenue also continues to show improvement aided by our China restructuring last year, with unit revenue up 1.6%. Specifically, Japan and Australia were up year over year, while we face challenges in Hong Kong and Korea.
Atlantic unit revenue declined by 4.6%. This decline was driven by transfer payments related to our joint business agreement of about 2.3 points and currency effect of about 1 point. International point-of-sale remains challenging, but we successfully shifted the North America and point-of-sale and grew load factor by 3.2 points. Domestically, we saw and continue to see broad-based strength with unit revenue growth of 4% and improved unit revenue across every hub.
We continue to see weakness in our cargo business. Weaker demand due to trade concerns across the system drove cargo yields lower by 4% for the quarter. When combined with year-over-year international schedule reductions, the result was cargo revenues fell 19.9% to $208 million. Total operating expense in the third quarter were up 2.1% at $11.1 billion.
When fuel and special items were excluded, our unit cost increased in the third quarter by 4.8% compared to 2018 due primarily to higher salaries and benefits, maintenance and regional expense and lower-than-planned capacity. Turning to the balance sheet. We ended the quarter with approximately $8 billion in total available liquidity, well above our target liquidity balance of $7 billion. During the third quarter, we paid dividends of $44 million and repurchased $200 million of stock or 7.3 million shares.
As Doug talked about, we have begun to delever the balance sheet as our capex requirements have reduced this year. We expect our adjusted debt position, including pensions, to decreased by $1.5 billion this year. On October 10, we announced we had removed the 737 MAX from our schedules through January 15, 2020. We now expect the 737 MAX grounding will have a negative full-year 2019 pre-tax income impact of approximately $540 million based primarily on lost revenue from schedule reductions.
Now that we have removed the MAX from 2019, we expect capacity growth of approximately 2.7% for the fourth quarter and 1% for the full year. This is less than half the full-year capacity growth we had expected at the start of 2019. Despite this capacity level, our expectations for full-year cost per ASM, excluding fuel and special items, is unchanged from previous guidance at approximately up 4%. For the fourth quarter, we continue to expect that our CASM, excluding fuel and special items, will grow by approximately 3%, despite the additional reduction in ASMs due to the MAX grounding in the fourth quarter.
Looking forward, we see no signs of macro softness in our forward bookings. We expect domestic demand to remain robust and Latin to again be the best-performing international entity. We expect our fourth-quarter year-over-year TRASM to be flat to up 2% and PRASM to be about 1 point better than TRASM. We also expect that our pre-tax margin, excluding net special items, to be between 5% and 7%, the midpoint of which would represent the third consecutive quarter of pre-tax margin expansion.
Given our expectations for the fourth quarter, we believe that our full-year earnings per diluted share, excluding net special items, will be between $4.50 and $5.50. We have tightened the top end of our previous guidance of $4.50 to $6 per share due to the additional $140 million reduction in earnings from the deferral of the MAX in 2020. Our total projected capital expenditures for 2019 is expected to be $4.3 billion, comprised of $1.7 billion in non-aircraft capex and $2.7 billion in aircraft capex. The slight change from previous guidance is due to the timing of the MAX deliveries moving from 2019 to 2020.
Finally, I would like to give some preliminary guidance for 2020. We're still working on the final budget, and there is still a measure of uncertainty over when our MAX aircraft will be introduced to service and new aircraft delivered and available for use in our fleet. As Doug mentioned, we plan to grow our network with efficient and profitable growth. At this point, we anticipate total 2020 year-over-year capacity growth of approximately 5%.
It is higher than the year-over-year 2020 growth we had anticipated at the beginning of 2019, but is entirely due to the grounding of the MAX and the cancellations resulting from the disruption of our operations, which reduced capacity in 2019. Importantly, our year-end 2020 absolute capacity is in line with our expectations from the beginning of 2019. Given this capacity guidance, we have tightened our estimate for CASM, ex fuel, special items and new labor agreements, to be approximately flat in 2020. With that, we'd like to turn the call back over to the operator and to begin the question-and-answer session.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question comes from Joseph DeNardi from Stifel. Your line is open.
Joseph DeNardi -- Stifel Financial Corp. -- Analyst
Yes, thanks, Doug. Good morning. I'm wondering if you could just talk about kind of expectations for earnings next year. If you've lost $500 million or $600 million from the MAX and maybe a couple $100 million more from the mechanics issues, how much of that can you kind of recapture next year? Why shouldn't kind of the base level of earnings for the business be somewhere closer to $4 billion next year? Thank you.
Doug Parker -- Chairman and Chief Executive Officer
Sure, Joe. Again, we will be able to give you much better guidance as we -- our budgeting process has just begun, so we can do a better job of giving you estimates next quarter. But the two headwinds of you -- you mentioned that we faced this year, certainly, should not be headwinds next year. And the amounts you described, the one issue, I will just -- a little bit down is the MAX.
Again, they're not all back in January 1 as Robert described it, they'll phase in over the course of the year. So to the extent whatever that headwind was in 2019, I don't think you should build all that in for 2020. But on a run rate earnings, you're right. And again, I'm not, by any means, trying to give you an earning estimate, but absolutely agree that whatever earnings are going to be in 2019, they're going to be a good bit better for the two reasons you suggested.
Joseph DeNardi -- Stifel Financial Corp. -- Analyst
OK. And then you've never really talked about the free cash flow outlook that bullishly, I don't think, in terms of how much it is relative to your market cap. I just want to make sure I kind of understand. I mean from a leverage standpoint, nothing has changed.
That leverage will kind of come down naturally, but we should assume that the free cash flow is primarily used to repurchase stock. Is that the idea going forward?
Doug Parker -- Chairman and Chief Executive Officer
Yes. Again, let me expand a little bit then. You're right, we haven't disclosed the numbers, Joe, really, I mean, not because they're dramatically different than we would have said in the past versus now a year. We have -- we consistently said in the past that we're going through a period of high capex.
Once we get through it, you should expect to see us generate free cash flow. And when we do that, you'll see us naturally delever. All of those statements, hopefully, you would agree with what we've said. What we haven't been able to do or having wanted to do really is tell you that three years from now, here's what those numbers will be.
And now it's just upon us. And as that free cash flow gets generated in 2020, we can give you more clarity on that. So we are happy to. The $5.5 billion of free cash that I mentioned again is simple math on steady state earnings.
We can all decide what earnings might be as we go forward, but that's what that is. And again, we certainly aren't going to be happy if 2019 earnings are the earnings in 2021. The debt paydown numbers that I gave you are reasonably simple math. Just looking at what we know amortizes over the two years and what we believe we need to add, as we do have additional requirements, but obviously, the amortizations exceed the requirements.
So that's -- that number, again, is nothing -- it is a number we feel comfortable giving because it's what the math is telling us. And then to your point, to the extent that first number, the free cash flow generation is greater than our needs to run the airline and retire debt, we believe that cash certainly in excess of our very high cash balances is best used by returning it to our shareholders. It's their cash. Us holding more than we need is a horrible use of capital, and we should return that to you as efficiently as possible.
What we believe the stocks and their value, we should do that by repurchasing our shares. So that's what you should expect to see from us.
Joseph DeNardi -- Stifel Financial Corp. -- Analyst
Thank you.
Operator
Thank you. Our next question comes from Brandon Oglenski from Barclays. Your line is open.
Brandon Oglenski -- Barclays -- Analyst
Hey, good morning, everyone, and thanks for taking my question. Doug, I guess, just looking back on the last couple of years, I mean, I understand that the MAX definitely was quite disruptive this year. And you guys do have some good things going on in the network. But even giving credit for that, it does look like you're op income is still down on like a two-year basis on what's been a pretty robust economy.
And not that we're necessarily comping every day to your peers, but their op income is up in that same time period. So what -- retrospectively looking forward, what can change in this dynamic where American can start to really leverage the economy?
Doug Parker -- Chairman and Chief Executive Officer
Sure. Thanks, Brandon. Again, without having those numbers in front of me, what I do know is, first off, I would always argue that for airlines, operating income is a tough measure to look at if you're trying to really look at just operating performance. I encourage you to look at EBITDAR.
I know, we always encourage you to capitalize our operating leases on the balance sheet. And you should do the same thing by not including the operating leases and your operating cash flows, and it makes a difference. So when you do look at -- so I always suggest, when I'm looking at the numbers myself is part of what you're seeing in deterioration relative to others is what I just talked about, which is partly modernization, which is now done versus theirs, which is about the come. But putting that aside, I don't disagree with your point, and none of us should, that we've underperformed elsewhere, not just in the ownership cost.
And the -- as we look to that, the primary reason is related to the issues we talked about. We've seen our properly adjusted and stage-leap adjusted unit revenue gap, certainly, versus Delta which was widening as we -- through every year since the merger -- I'm sorry, which is narrowing every year since the merger. It's starting to widen in the last six quarters. And that's not what it should be doing.
We should be narrowing that gap, not widening it. Again, there are a number of reasons as to why it is, but the biggest ones tend to be that we haven't executed on our operation. But by the way, there's no doubt the 737 MAX issue certainly has led to the widening of that gap. But booking around it -- as opposed to trying to explain what it is, what I'll tell you is we're committed -- more committed now and going forward.
We feel very good about that, Brandon.
Brandon Oglenski -- Barclays -- Analyst
OK. I appreciate that thought. And I mean the relationship still kinds of hold on EBITDAR basis, but that's understood.
Doug Parker -- Chairman and Chief Executive Officer
Fair enough.
Brandon Oglenski -- Barclays -- Analyst
And I guess on the upside, though, you guys did call out, I think, Dallas in the second-quarter RASM being up 1.5. I think now you're talking about, and correct me if I'm wrong, but the hub being up about 3.5 in the third quarter. So looks like, maybe incrementally, as your hubs scaling here is getting better performance, is that right? And do we think that Charlotte can be the same in 2020?
Doug Parker -- Chairman and Chief Executive Officer
Vasu Raja is here. He will take that one, Brandon.
Vasu Raja -- Senior Vice President of Network Strategy
Yes. And so a little bit of the effect that you see is really the effect of the peak of the summer happening more in the third quarter. That said, we do see a significant benefit. As we improve the connectivity of our hubs, we see that not only the marginal revenues of our new flying is coming in well above the system average, it's having a meaningful impact on all the flights that remain.
So for example, the new flights -- the new routes that we have and the new frequencies came in at a 85-plus-percent marginal PRASM, and we're expecting to come in at 75%. That has a meaningful impact on our big trunk routes, DFW L.A. and DFW Vegas. We do anticipate an effect like that in Charlotte.
And indeed, we expect a meaningful effect in Charlotte because while we grow the hub and departures and improve its connectivity, we'll also upgauge the hubs, so we'll have more seats on all of those really advantageous connections.
Brandon Oglenski -- Barclays -- Analyst
Thank you.
Doug Parker -- Chairman and Chief Executive Officer
Thanks Brandon.
Operator
Thank you. Our next question comes from Jamie Baker from J.P. Morgan. Your line is open.
Jamie Baker -- J.P. Morgan -- Analyst
Hey, good morning, everybody. Nice to hear the renewed vigor. Are there any triggers with Boeing in the contract or potentially with lessors that would allow you to alter the delivery schedule once the MAX pipeline resumes? Also on the 5% capacity growth, what metrics do you look toward next year in determining if that's the right rate? For example, would you tolerate margin contraction in 2020? After all, with the pace of the buyback, you could still see CASM earnings growth and free cash flow, but it lower margins. Would that be deemed acceptable by the team?
Doug Parker -- Chairman and Chief Executive Officer
Let me try and the others can chime in here if I'm not right. But irrespective what the contract may or may not do, we want these airplanes. I mean we want -- we've got -- we have -- if we could -- if we'll be flying them all today, that's what we'd be doing. So as soon as they can be -- as soon as they are certified, and we've got pilots trained, we'd like to get them in service as quickly as possible.
What Robert described here is what we believe is as quickly as possible. So that -- and that's what we think the right thing to do is we're not looking to change the delivery schedule indeed. If anything, we'd like to accelerate the delivery schedule. We feel really good about our growth prospects.
Second part of the question, I'm sorry, I think I might have answered it already, but go ahead.
Jamie Baker -- J.P. Morgan -- Analyst
Yes. Would you tolerate margin contraction next year after all? And not to devolve into a modeling discussion, but you still get the earnings growth and free cash at lower margins, would you accept that outcome?
Doug Parker -- Chairman and Chief Executive Officer
Yes. We're not -- anyway, we're going to try and maximize value at all times, not so much try to manage earnings as much as maximizing value. We believe the way to maximize value is to continue to expand our network. We have fewer airplanes today than we would like.
That's a rare situation for American Airlines. But I'm telling you, every meeting we have with our planning team, they're looking -- they're on the table asking for more aircraft, not fewer. We want to get those airplanes into the system. Again, this is not -- this is a growth you should be happy about that we're kind of on the table for.
This is in our core markets. Filling out something that is very rarely we are able to do, we just take hubs like Dallas/Fort Worth and Charlotte where we have gates and add more flights into those hubs. That's really, really good growth. And we want to do it as quickly as we can.
And irrespective of what that may do to the next year's margins or earnings, I don't know. But I know it's the correct decision for our shareholders.
Jamie Baker -- J.P. Morgan -- Analyst
OK. And second question, does the free cash flow commentary for 2020 include -- or is it predicated on Boeing compensation?
Doug Parker -- Chairman and Chief Executive Officer
It is not, though, because, again, I told you -- again, what's predicated on is -- to be personally clear, it's predicated on flat earnings year over year. So that's what it is. And again, that's not an earnings forecast. It's just -- it's giving you a free cash flow number.
If we have flat earnings, you should do your own earnings forecast. We'll do our best to give you better guidance on that next quarter.
Jamie Baker -- J.P. Morgan -- Analyst
Perfect. Thank you very much, gentlemen.
Doug Parker -- Chairman and Chief Executive Officer
Thank you.
Operator
Thank you. And our next question comes from Darryl Genovesi from Vertical Research Partners. Your line is open.
Darryl Genovesi -- Vertical Research Partners -- Analyst
Hi, good morning, everyone. Thanks for your time. Derek, if I just take your $540 million number from the MAX that you laid out, I assume -- I mean some of that -- I think some of that would probably reverse in 2020, even if the MAX doesn't come back at all just because it's no longer a surprise that you don't have it. Is that accurate? And can you help us break out sort of the impact of having to sort of manage the schedule on a day-to-day basis the way you did versus the impact of just having less capacity overall? Does that make sense?
Derek Kerr -- Chief Financial Officer
Yeah, I think so. And I think I understand the reverse side of it. What we have to remember is, I mean, this is really total revenue that we lost on this. It's about $700 million.
If you take the proposal, that gets to $540 million. So really, we will lower ASMs by about 1.8%. So we just didn't fly those ASMs, right? We don't get those back. So that revenue doesn't come back.
Now the expenses that we had and we spent on there, those are going to be there, so you should not see -- when we put this growth back in, you shouldn't see the CASM go up as much because of the fact that the expenses were already there. So the $540 million is really a number where you take about $700 million of revenue due to the not flying, offset by some cost, that gets you there. And you're right, the costs that are embedded in the airlines today are here already to fly the aircraft when they come. So that should be -- I shouldn't have to add those cost as those planes come back in.
And I think that's what you're asking, right?
Darryl Genovesi -- Vertical Research Partners -- Analyst
Actually, I was kind of asking more about the scenario where you sort of don't -- you kind of don't get it back, right? I mean suppose January 15 ends up being way optimistic, I'm just try to get a sense of how much I should expect this flat CASM, ex guide to move around based on the fact that I think there are probably, for instance, I mean, you're probably not going to be asking pilots to bid on schedules and getting hit by that or to the extent that you did early on in this process. And so I guess I was thinking that there's probably some CASM ex-relief associated with just not kind of having to manage things on a day-to-day like that -- day-to-day basis like that.
Derek Kerr -- Chief Financial Officer
Yes, you're definitely right on that. This is assuming the MAX coming back at the schedule that Robert had talked about. There could be changes to that just depending as we go forward. But this is assuming the MAX schedule that Robert talked about where they phase back in into the early part of the year and the deliveries do come in.
Robert Isom -- President
And Darryl, I'll just add that the pilots are here, flight attendants are here, the gates are here. So for the most part, we are ready to fly these aircraft. If we want to hear something from Boeing that was just incremental changes. There's not a heck of a lot that you can build that.
To the extent that there would be something to say, give us much more visibility long into the future. Of course, we would make adjustments. But right now, it's really just around the edges that we can cut back.
Darryl Genovesi -- Vertical Research Partners -- Analyst
OK. And if you -- have you slowed your hiring at all, in anticipation that this keeps -- that this continues to linger?
Doug Parker -- Chairman and Chief Executive Officer
We slowed our hiring early in the fall here, but then we are hiring back up to meet the schedule needs for early part of '20 -- early part of the first quarter. So we are back making sure that we can fly the schedule that Robert talked about with the aircraft coming back, so that when they come back, we're ready to roll.
Darryl Genovesi -- Vertical Research Partners -- Analyst
All right great. Thank you.
Doug Parker -- Chairman and Chief Executive Officer
Thank you.
Operator
Thank you. Our next question comes from Hunter Keay from Wolfe Research. Your line is open.
Doug Parker -- Chairman and Chief Executive Officer
Hey, Hunt.
Hunter Keay -- Wolfe Research -- Analyst
Hey, Doug, good morning. I actually have a question for Derek and a question for Vasu. Derek, can you just help me understand the accounting of how you guys will realize the concession payments from Boeing? Don't care how much it's going to be, just want to know if it's going to impact the P&L, is my main question?
Derek Kerr -- Chief Financial Officer
We don't have an answer on that yet. It all depends on how we get it back. The accounting is if you get it against the aircraft price, that would just go into reduced aircraft price and would hit the P&L. If it comes back as lost earnings, it possibly could hit the P&L.
So we don't -- we do not know yet. We are in negotiations with Boeing and have continued to talk with them. And as we continue to grow through that, we will update everybody on where it will hit the P&L and if it will hit the P&L and what the number is going to be.
Hunter Keay -- Wolfe Research -- Analyst
OK, great. And then Vasu, the 5% capacity growth. I'm surprised that's so low. It implies only about 3.5% core growth in 2020.
Can you help me -- can you peel that back for me a little bit? I mean how is it so low? And maybe you can talk about mix of domestic and international gauge anything like that. I was expecting you guys to show more like 4%, 5% sort of core growth. So is that a conservative number? Any color on that will be great from your perspective.
Vasu Raja -- Senior Vice President of Network Strategy
Yes, Hunter, first of all, we're still working through our high level of operations for next year. But I'd say the simple way to think of it is that about a quarter and a half of it or so is just the bring back of the MAX. The remainder of it is the growth of our core business. And of that remainder, it's pretty evenly split between just a variety of gauge initiatives and actual departure-based growth.
As far as domestic-international split, we're still kind of working through that right now. Of course, we've announced a lot of international routes, you can probably backs off from some of it. We anticipate that domestic will moderately outgrow international, but it will be pretty close. But we are refining it more -- into that more in the next quarter.
Hunter Keay -- Wolfe Research -- Analyst
OK. Thanks.
Doug Parker -- Chairman and Chief Executive Officer
Thanks.
Operator
Thank you. Our next question comes from Duane Pfennigwerth from Evercore. Your line is open.
Duane Pfennigwerth -- Evercore ISI -- Analyst
Thank you. Derek, sorry if I didn't hear it correctly, but does your flat CASM outlook or preliminary flat CASM outlook include or exclude new labor agreements?
Derek Kerr -- Chief Financial Officer
It excludes labor agreements.
Duane Pfennigwerth -- Evercore ISI -- Analyst
OK. And how would you handicap probabilities and I know you don't want to talk about terms, but timing on mechanics and pilots next year?
Doug Parker -- Chairman and Chief Executive Officer
Duane, I will talk on that one. As I said in my comments, we have agreed that NMB's request not to discuss, we're under negotiations that starts to do it. I know it's important to you. We'll -- hopefully, you'll understand, we are much more focused on getting negotiations done and don't want to jeopardize that.
So if you don't mind, we'll just tell you that we are happy to run negotiations. We are happy that the NMB has asked us in post live not to talk about it. We think that helps the negotiations and we don't want to violate that. When we do have a contract, we will absolutely let you know the answers to those questions.
Duane Pfennigwerth -- Evercore ISI -- Analyst
Totally fair. Sorry for asking.
Doug Parker -- Chairman and Chief Executive Officer
OK. Not a problem.
Duane Pfennigwerth -- Evercore ISI -- Analyst
I appreciate the surprise that was kind of dumped on you by the Chilean courts, which catalyzed this change with LATAM. But can talk about how you're going to replace that feed? For example, would you envision the JV across multiple airlines in South America?
Robert Isom -- President
I'll go ahead and start on that. The great news is that our network, by far, is best in the South America. There's a lot that we can do to augment that on our own. And while again, LATAM was disappointing, we also have to realize that the nature of what that was and what could be.
So for now, customers are choosing to purchase American and to fly American. And as we take a look at what goes forward, of course, that network we have in South America is going to be really attractive to a lot of partners. And so we are busy working and exploring and evaluating the opportunities that are out there right now. So good things to come.
Duane Pfennigwerth -- Evercore ISI -- Analyst
OK. Thank you.
Doug Parker -- Chairman and Chief Executive Officer
Thank you.
Operator
Thank you. Our next question comes from Savi Syth from Raymond James. Your line is open.
Savi Syth -- Raymond James -- Analyst
Just a question on the international growth here in the Transatlantic. I recognize you had some individual items and effects that was kind of hurting it. What's driving kind of the double-digit increase? And would you expect that to moderate given the unit revenue pressures?
Vasu Raja -- Senior Vice President of Network Strategy
This is Vasu. Look, a lot of what's really driving our capacity growth, that growth was just simply on the growth of capacity. As Derek mentioned in the opening remarks, in the last year, we did a lot to go and restructure our international network. We cut something in the order of 17 or 18 routes across the system that were really long-term money losers, and we turned them into 22 new routes, much of which was growth in Transatlantic and all of which is coming at a really attractive revenue clip.
There have been some issues in 3Q with foreign exchange and things like that as Derek mentioned, but the marginal profitability of the routes we've added in Transatlantic have been pretty impressive, and indeed, year to date, our Transatlantic unit revenues on an absolute basis have been higher than they've been at any point since the merger. So we are encouraged by it. It's been really great utilization for our airplanes and altogether margin positive for us.
Savi Syth -- Raymond James -- Analyst
And if I may ask another network type question. Just curious on your view on Chicago. You've made some changes there. One of your competitors is definitely kind of refocused in that hub.
And now as they kind of introduce the 550, some of the -- the leadership that you had with some of them, kind of, taking advantage of your larger grade regional aircraft opportunity there. That advantage seems to be eroding as we look forward in the network. Any thoughts on how you view kind of the performance in Chicago and your positioning in Chicago?
Robert Isom -- President
We are actually really excited for our future in Chicago on a number of levels. And for one, and I've talked about this probably in lot of forum, removing Chicago to Asia for us has been actually a big benefit to the Chicago hub. A lot of that was not just unprofitable flying in and of itself, it was claiming space off of domestic airplanes and things like that that could have otherwise gone to other customers in the Chicago local market and people connecting from other parts of the business. So that alone has been a big change in Chicago.
And also as we look forward, though our principal competitor there is indeed rolling out the new product, the reality is we still will be able to offer a more first-class seats to the Chicago customer. We absolutely intend to continue doing that. One of the major things that we're excited for, as we go into next year and work through the MAX situation, is that we have a lot more flexibility to do things like bring the A319 in Chicago, which will enable us to kind of up-gauge regional jet markets to vary our capacity more through day and week to create a lot of variability in the schedule that ultimately goes and attracts the key business customers in the Chicago and Greater Midwest area that our principal competitor seems to be targeting. So we very much like our chances out there.
We very much will continue to do that. And even going forward looking longer run as we ourselves continue aggressively replace single-class, 50-seat RJs of two-class airplanes, Chicago will be a place where we'll continue to thrive and be able to produce improving results.
Don Casey -- Senior Vice President of Revenue Management
This is Don. I'll just add one more data point frame. And we really outperformed the domestic business in the third quarter. They were 12%, and our best-performing hub for unit revenue was Chicago.
Savi Syth -- Raymond James -- Analyst
Good. Thanks, guys.
Robert Isom -- President
Sure.
Operator
Thank you. Our next question comes from Rajeev Lalwani from Morgan Stanley. Your line is open.
Rajeev Lalwani -- Morgan Stanley -- Analyst
Good morning, gentlemen. Thanks for the time. Doug, a question for you. I appreciate the enthusiasm this morning, but what makes this time different versus before? I mean we've heard relatively bullish pitches from you on analyst day down in Dallas a couple of years ago.
So what stands out this time versus then to sort of get the buy-in from investors and analysts alike?
Doug Parker -- Chairman and Chief Executive Officer
Look, one you haven't heard from us before of these cash flow initiatives -- regarding the early cash flow, I'm sorry, generation, because we couldn't say it before. Again it's not anything I feel particularly badly about. We needed to invest in this company. And we described at that time to investors that it was going to be significant.
And the reality is, while we are making record profits, we weren't generating cash flow because we are spending it on upgrading our fleet of that $31 billion I talked about; last six years, $23 billion of that was spent on new airplanes. So that's behind us. So that's the new message. I don't know -- I don't think it's a change in bullishness.
It's the new message and one that I think is important to our investors. So that's point one. And the other only what I'd add to the bullishness piece is our bullishness at the moment is not driven by us seeing anything differently than anyone else. It's driven by our absolute understanding that we -- our earnings this year were hindered by two circumstances that we've fully expect to be behind us early in 2020.
And our commitment to ensure that we have operational excellence and the growth prospects, all of that as we try in Chicago, and in conclusion that's where we are.
Rajeev Lalwani -- Morgan Stanley -- Analyst
All right, that's helpful. And then as a follow-up, just maybe for Derek as well, broadly on labor. I don't want to talk about specific contracts, but broadly on labor. Do believe that you've got to step up wages to get the buy-in of employees.
I mean that was sort of the strategy at United. It seems to be successful for now. But maybe I'm not thinking about it or approaching it the right way that that may be needed to deliver on some of what you're describing?
Doug Parker -- Chairman and Chief Executive Officer
Yes. Look, as we talk to our employees, the biggest thing we need to do for our team is provide a reliable operation. We -- and thanks to some great front-line leadership have done a really nice job of taking care of our team. We have, as you are well aware, needed to increase compensation across the board to get our wage levels to where their peers in other airlines are, because they certainly deserve to be paid really as much or more as those that are doing similar jobs at other airlines.
But the issue we are dealing with now as it relates to the team is we need to give them the tools they need to do their job, which they do so incredibly well. That's best going to take care of our customers. And we have been doing that. When we don't run, we don't have operational excellence; our team ends up bearing the brunt of that.
They end up not being where they are supposed to be. They end up having inventory over time. They end up having unhappy customers. All of which impacts the run off.
So what we know and it's important in operational excellence as to our customers and to our shareholders is really important to our team. And that's all those reasons why we are so committed to making sure it happens. And we believe doing that will do more for our team than anything else can do right now.
Rajeev Lalwani -- Morgan Stanley -- Analyst
OK, great.
Operator
Thank you. Our next question comes from Mike Linenberg from Deutsche Bank. Your line is open.
Mike Linenberg -- Deutsche Bank -- Analyst
Hey, Doug, two quick questions here, I guess, on fleet. Doug, the $8 billion to $10 billion reduction in net debt over the next five years, presumably there is no major fleet decision for American, probably up until '24, '25, that's kind of implicit in that. And if that is the case, what is the next aircraft type in the fleet that you're looking at that you would then have to address? What's the timing on that?
Doug Parker -- Chairman and Chief Executive Officer
I would add -- I'll let Derek to add. Yes, Mike, we will have -- the MD-80s were gone out, the A190s were gone out of the fleet, the 760s were gone out of the feet, 75s will eventually go out of the fleet. So the next big decision for us is in the A319 category. Everything else will -- those aircraft are on average 15 years today.
So as you said, we don't have any decision to make until '25 time frame. We might talk earlier. But I think it's really in that category, the 319 category, and what would be the replacement for that in our 320sat the bottom and 150-seat range to 130-seat range.
Derek Kerr -- Chief Financial Officer
And Mike, other set of data points for you and everyone else. As we look at our fleet now, only 10% of our fleet, only 10% of our fleet is 20 years or older as compared -- contrasted to our two large competitors who have about a third of their fleets 20 years or older. So anyway, it will be a while. We feel very good and indeed over half of our fleet is zero to 10 years.
So we again -- it took us a lot to get there and we had to spend a lot to do it. But we feel really good about where we are with our fleet and certainly relative to our cash needs versus our competitors going forward.
Mike Linenberg -- Deutsche Bank -- Analyst
Agreed. A great position to be in. And in just my second follow up, on the A321neos, I mean you're obviously taking delivery of them now and into 2020. Given that you are, I think, Airbus as you may be their largest customer for the A320 family right now just looking at your fleet and the potential, any chance that you can have those airplanes delivered out of Mobile rather than Europe as we move forward?
Derek Kerr -- Chief Financial Officer
Yes. I would say -- this is Derek. We have already a schedule out through the mid of 2020, where we'll have nine coming out of Mobile, six of them are Hamburg today, and then we have still six to be determined. So we'll do everything we can.
We have 21 deliveries the next two years. We're doing everything we can to talk to Airbus to try to get them out of Mobile and make sure that those aircraft come from that manufacturing facility instead of Hamburg. But as of today, of the 21 we have come in, six come from Hamburg, nine from Mobile and six yet to be determined which are late in 2020, that we'll continue to work to get those out of Mobile.
Doug Parker -- Chairman and Chief Executive Officer
Mike, implicit in your question, I think, is that if we didn't do that that we would be paying the tariff, yes?
Mike Linenberg -- Deutsche Bank -- Analyst
Yes.
Doug Parker -- Chairman and Chief Executive Officer
What you didn't say that, let me just assume you did.
Mike Linenberg -- Deutsche Bank -- Analyst
Yes, definitely.
Doug Parker -- Chairman and Chief Executive Officer
Now, look, what we know, don't think, no, that the USTR pays the tariff at the level it did to ensure that the burden didn't get borne by U.S. airlines by the French. So we are happy to work with Airbus to mitigate that amount. But I don't think you should assume that if it's not mitigated, that American Airlines would be where it's borne.
Having said that, what we really hope is that we never get to that point. The answer to this is not to keep escalating and having tariffs on both side. The answer to this is for the European commission and USTR to sit down and work this out in a way that doesn't have tariffs on both place. But if they can't do that, again, we are certain that the goal of the USTR was not to have these tariffs paid by U.S.
airlines and then passed it on to the U.S. citizens.
Mike Linenberg -- Deutsche Bank -- Analyst
All right. Thanks, Doug. Thanks, Derek.
Doug Parker -- Chairman and Chief Executive Officer
Yes.
Operator
Thank you. Our next question comes from Helane Becker from Cowen. Your line is open.
Helane Becker -- Cowen and Company -- Analyst
Thanks very much, operator. Hi, everybody, and thank you for the time. I just had two questions. My first question is with respect to how you're intending to use Envoy and some of your other regional airlines for the capacity growth that you're doing in Dallas and Charlotte.
And then my other follow-up question is, as you think about growing Latin America, which you've talked about in your prepared remarks relative to taking up that capacity that you're kind of losing with LATAM, is there a space at Miami that do the same thing you're doing in Charlotte, DCA and in Dallas?
Vasu Raja -- Senior Vice President of Network Strategy
This is Vasu. Let me take your questions in reverse order. First of all, space in Miami, yes, we have the space in Miami to grow in any number of ways, adding the three flights that Robert mentioned earlier and it all accommodate within the capacity footprint that we have there. We have a really great position in Miami, a really great relationship with Miami airport and community at large.
And so we -- the way we see this, as Robert said, that we will always have the biggest and the best Latin American network. It is at the very heart of our competitive advantages as an airline. And that's one thing that even through all of this stuff we will continue to do and will continue to be able to go and operate Miami and grow there. Though it doesn't have the profitability of markets like DFW and Charlotte, there are routes out of Miami that are most critical for our customers and certainly certain days and week and times of year.
It's a really attractive marketplace for us and you'll see us take full advantage of that in the year ahead. To your first question about Envoy growth, which I think in part you meant Envoy, and maybe larger you meant kind of regional versus mainline. I'll speak to both. Our growth this past year has been heavily driven by the regional operation.
Next year, it will be more heavily driven by our mainline operation. Our growth in Charlotte especially is less about growing our regional jets, it's about, one, improving the connectivity of the hub, making more O&D market and then very critically having more seat availability. So you'll see us do things like bring the 737, then in a larger degree turn more regional jets in the mainline. We endeavor to doing the same thing in DFW as well.
Now that said, our regional jet network is a very critical part of our airline. That does -- and we say that the little jets make the big jets go. And so there will be a big dose of regional jet growth as well. It'll just lag the mainline next year, whereas this year, it kind of outpaced the mainline.
Helane Becker -- Cowen and Company -- Analyst
OK. Thank you very much. Thanks, guys. Thanks, Doug.
Operator
Thank you. Our next question comes from Dan McKenzie from Buckingham Research. Your line is open.
Dan McKenzie -- Buckingham Research -- Analyst
Oh, hey, good morning. Thanks for the time here. If possible I would love to clarify the messaging on 2020. So CASM ex fuel flat next year, you expect to grow earnings.
Investors are going to interpret that as your base outlook for revenues to be flat or up despite a pretty high capacity picture. So not asking for 2020 revenue guidance, of course, but just trying to make sure there's just no flaw here in the preliminary thinking.
Doug Parker -- Chairman and Chief Executive Officer
But you're asking for revenue guidance. If we take out CASM is flat and earnings are up, it sounds like you're asking for revenue guidance. But look, I want to go back to what we said so far, Dan. And we're not yet prepared to give you real guidance on earnings in 2020 because we're doing our own work and so we'll let you know more as we know more ourselves.
Certainly, over the next call, we'll give you better guidance on 2020 earnings forecast, but you should do your own work on what you think about in entering new revenues and where we are relative to that. Right now, we can't give you much more than that.
Dan McKenzie -- Buckingham Research -- Analyst
Yes, understood. OK. I had to try, of course. OK, so good commentary, free cash flow demand, solid revenue backdrop.
There is worry that the parallel universe that the consumer today goes the way of the industrial sector tomorrow, I've had more than one conversation with owners about what American earnings would look like in the downturn. And again, I know, that's not your message today, but can you talk about the fleet flexibility, so both narrowbody, wide-body? And is there a way to get ahead of the economic data points as they start to worsen?
Derek Kerr -- Chief Financial Officer
Yes, Dan, we have a significant amount of fleet flexibility. We have unencumbered aircraft with some 264 aircraft, almost 100 of those mainline, 172 regional. We have 65 deliveries to come next year, which we could deal with as we needed to. Lease extensions, there's about 47 of those that would come off.
And then older aircraft, we have 53 of those, which both of those are in the unencumbered categories. So we have upwards of 300, 350 aircraft fleet flexibility that if something happened, we could take the fleet down, if required, if there was some type of recession or anything like that. But as I said there are, we are not seeing anything like that in our bookings and things just continue to stay strong.
Dan McKenzie -- Buckingham Research -- Analyst
Understood. Thanks so much guys.
Derek Kerr -- Chief Financial Officer
Thank you, Dan.
Operator
Thank you. And we'll take our last analyst question from David Vernon with Bernstein. Your line is open.
David Vernon -- Sanford C. Bernstein -- Analyst
Hey, guys, thanks for taking the time. Question for you on the focus for 2020. Obviously, Rob and Doug, you talked about getting the on-time performance and the basic execution done and improved. I'm just wondering if there are specific things in the revenue pipeline that will help you to narrow that gap that you mentioned before on the revenue side with some of your peers.
Don Casey -- Senior Vice President of Revenue Management
Yes, this is Don. Again, if you go look at our passenger revenue performance this year and 2019, we did better than our [Inaudible] point based on guidance for 4Q. That was based on the revenue initiatives that we have in the pipeline this year, which also included our growing operation in Dallas, which we had in place, 1st of July. So as we look forward into 2020, we continue to have a pipeline of revenue initiatives.
Obviously next year, big part of that is going to be the annualization of the growth in Dallas, adding the growth in Charlotte and we are going to be up-gauging and adding seats to airplanes, which is going to be very accretive to our raw revenue performance in 2020.
David Vernon -- Sanford C. Bernstein -- Analyst
Anything on the product side specifically that you could talk to, around whether it's some of the premium products or some of the other work you'd be doing on the cabin side that would help us kind of look for scale to get some upside?
Robert Isom -- President
Don, you can chime in here, but what is that we are finally getting to the point of being to offer instant upsell in higher-level cabin. So as we've been improving our ability to segment, whether it's Main Cabin Extra or Premium Economy type seats, being able to offer that to customers in a convenient way is something that we finally have the technology to be able to do, and that was launched earlier this summer, expanded throughout the domestic, and now we are looking to move that to international and also to other channels as well. So that's something that will absolutely help us take advantage of the product offerings that we have out there. And to Don's point, in terms of being able to harmonize our cabins and ensure that we have the configurations we want, we have to take out the hiatus because of operational issues this past summer on those programs.
And those have been restarted and we anticipate that our 737 classic fleet will be fully upgraded by the summer of 2021.
David Vernon -- Sanford C. Bernstein -- Analyst
And then maybe just a quick follow-up on the deleveraging that's going to happen over the next couple of years. Is there anything you can tell us about the rate that you'll be retiring versus the rates you are paying on more recent debt, like is there going to be any sort of shift in effective interest rate as we are modeling out the next couple of years of cash flow?
Derek Kerr -- Chief Financial Officer
I would say -- this is Derek. I would say no. I think our average debt is around 4% right now. So most of the higher priced debt we paid off.
It might be slightly higher of the old things that we're going to pay off because most of it is aircraft. That will include pension too. So we're going to take the pension down by about $3 billion in that calculation. So from an aircraft standpoint, it will be older aircraft that is probably up in the 5% range.
A little bit higher than what our average cost of debt, but not significantly higher.
Doug Parker -- Chairman and Chief Executive Officer
Just for clarification, like the $3 billion in the $8 billion to $10 billion.
Derek Kerr -- Chief Financial Officer
Yes, $3 billion is in the $8 billion to $10 billion -- sorry, over the five-year time period.
Operator
Thank you. And we'll now open up the lines for media to ask questions. [Operator instructions] And our first question we'll take is Alison Sider from Wall Street Journal. Your line is open.
Alison Sider -- Wall Street Journal -- Analyst
Hi, thank you so much. Hi. I was wondering if you could tell us anything about sort of the tone of the discussions you're having with Boeing around compensation. Is there a progress being made? Or from your comments this morning, is there concern about an impasse there?
Doug Parker -- Chairman and Chief Executive Officer
Alison, I will start. Again, the discussions are under way. But, I guess, I characterize the tone as early. I think not just -- there's no reason for us to be concerned at this point, but also no real clarity at this point.
Much of the reason being from the standpoint of Boeing, still not certainty as to when the aircraft will be reserved right. So talks are under way, but they are early. But we feel highly confident that the losses that American Airlines have incurred won't be incurred by American shareholders, but will be borne by the Boeing shareholders.
Alison Sider -- Wall Street Journal -- Analyst
Got it. And are you concerned at all about any additional delays, return to service timing? And I guess broadly, do you feel like Boeing, the leadership changes this may lately have gone far enough? Or do you think the company might have to do more?
Doug Parker -- Chairman and Chief Executive Officer
We were asked to return to service. To answer that question, as to return to service, the date that we have of January 15 is based on the best information we have from talking to not just Boeing, but the FAA. We were encouraged to see Boeing announce, I think earlier this week, that they believe the aircraft will be certified in the fourth quarter. So that information, I guess, it's probably safe to -- it's probably best to describe that information as best case given what we have all seen over the course of this process.
But it's a reasonable case, and therefore, if indeed that is -- that situation is correct, if indeed the aircraft is recertified in the fourth quarter, we absolutely -- we will be able to -- our five airplanes, as Robert described, certified flying -- revenue flying as early as January 15. If indeed that doesn't turn to be the case, we will once again need to adjust. And we've -- we unfortunately are getting really good at that. We have designed this one in particular to be easier to do than others in that regard.
So we are frustrated, but it is hopefully getting to the point. It certainly feels as though the delays we hear about seem to be shorter delays, the confidence seems to be higher, but we don't take that as certainly close to it. But based on everything we know today, certainly, it seems reasonable to have these aircraft in our schedule to five airplanes on January 15, and we are highly hopeful that will be the case. If indeed that turns not to be the case, we will adjust and let our customers know well in advance.
Alison Sider -- Wall Street Journal -- Analyst
Got it. Thanks. And on leadership?
Doug Parker -- Chairman and Chief Executive Officer
No comment.
Alison Sider -- Wall Street Journal -- Analyst
Thank you.
Operator
Thank you. Our next question comes from Dawn Gilbertson from U.S.A. Today. Your line is open.
Dawn Gilbertson -- U.S.A Today -- Journalist
Hi, good morning. Hey, two questions. One, Robert, you mentioned under consumer initiatives, new technology, I think you said related to helping families sit together. Could you go into any detail on that? And my second question is seat fees are really prevalent right now.
And I'm wondering where that -- you can give any sense of the revenue opportunity there and where that ranks right now in terms of ancillary revenue? Thanks.
Robert Isom -- President
Dawn, I didn't hear the second part of the question. The first part, just in terms of seating of families together, I'll just say this, we've always had technology to help, we've improved our algorithms, and ultimately, we are getting a much better hit rate of making sure that we protect and we reserve seats for those families. And so there is good things on that front, but all technology-based and really enhancements to processes that we have in place today. But now as it works, the second part of your question was, I didn't appear there was seat fees.
Did you say that?
Dawn Gilbertson -- U.S.A Today -- Journalist
I wanted to get a sense of the scope of -- you started these preferred seat fees and all airlines have them now pretty much to one degree or another. It seems to me that's got to be a pretty big revenue, you're bringing a lot of money from these preferred seat fees. And I'm just wondering if you can give us any sense of the scope of that, where you planning to take that, and where that ranks now in -- kind of in the ancillary hierarchy?
Don Casey -- Senior Vice President of Revenue Management
This is Don Casey. We've done quite a bit on the seat side, one is just introducing a different product. So the Main Cabin Extra, we did a relaunch with enhanced benefits a year ago. That has proven to be very successful.
And again, there are customers who do have the willingness to pay a bit more for better product. And that's what we're finding out in the marketplace. So we're continuing to expand the product portfolio for better products out there and provide better capabilities for customers to buy up even those better products and we're seeing good demand. Seat fees revenue today is now our second largest ancillary revenue stream after bags.
Dawn Gilbertson -- U.S.A Today -- Journalist
If I could just have -- just a quick follow-up related to that. When you say seat fee revenue, does that include -- so that includes your preferred seat fees where you get nothing extra and also Main Cabin Extra, what's in that basket?
Don Casey -- Senior Vice President of Revenue Management
It's basically every additional charge a customer is willing to pay for a better seat on the airplane. So in the case of preferred seats, those are aisles and windows and close to the front, and Main Cabin Extra, it's extra legroom, a free drink and better dedicated access to bins and early boarding.
Dawn Gilbertson -- U.S.A Today -- Journalist
Thank you.
Operator
Thank you. And our next question comes from Tracy Rucinski from Reuters. Your line is open.
Tracy Rucinski -- Reuters -- U.S. Aviation Correspondent
Hi. Good morning Doug. I was wondering what is your own position on the Boeing employees instant messages about MCAS and the simulator and the emails that referred to not including mention of MCAS in the flight manual?
Doug Parker -- Chairman and Chief Executive Officer
We don't have a position on that. Our position is we're highly interested in having the airplane met -- Boeing meet the requirements of the FAA and get the airplane recertified. I will note -- we think that FAA has been just doing a fantastic job in this process. And it's showing real leadership, they always do, on safety in aviation.
And you'll feel really confident that once the FAA recertifies this airplane, it will be the safest in the world and we are looking forward to that date.
Operator
Thank you. And our next question comes from Edward Russell from The Points Guy. Your line is open.
Edward Russell -- The Points Guy -- Senior Airline Business Reporter
All right, thank you. Vasu, I need to ask you -- about your comments on Chicago, you mentioned offering more first-class seats than competitors and then you talked about shifting to more A319s in 2020. However, in my understanding, it's been it's eight first-class seats versus some of your dual seat aircraft to 12 instead of offering 10 on their new dual aircraft -- dual-class aircraft. Talk a bit more about what the strategy is to attract business travelers in the Chicago market.
Vasu Raja -- Senior Vice President of Network Strategy
Yes, Ed, great question. And importantly the 319 has eight first-class seats anytime were taking out of single-class 50-seater and replacing with bigger jet, and of course, going from zero first-class seats to something more than that regardless of what it is. So with that in mind, really there's multiple things that we plan to do in Chicago. One of which is, look, we have a luxury in Chicago that our competitor doesn't have, which is that we have a gigantic East-West hub in DFW.
For our competitor that is the best East-West hub that they have. And so what we're really interested in doing is being able to provide the best product and schedule to the customers of Chicago to the world. We will increasingly do this as we move through a number of our fleet initiatives and product initiatives too. We will have better schedule of the key days the business travelers go.
We'll vary the capacity levels that we have in the course of the week. And then over the long term, what we will increasingly do is as we do more 50-seat replacements, you'll see more and more two-class services, whether it's larger RJ319 or 737s coming into Chicago.
Don Casey -- Senior Vice President of Revenue Management
I'll just add on that customers right now, I mean, they like our product in Chicago and we're seeing it in the numbers. I mentioned earlier, Chicago the highest in any hub we have. And we grew our corporate passenger volumes in Chicago in the third quarter by 7%. So customers like the product we have there right now.
Edward Russell -- The Points Guy -- Senior Airline Business Reporter
OK. So just to be clear, I'm understanding, the 50-seaters will come out, 319 this year and the 50-seat markets will step up to 76-seaters and those [Inaudible], that's kind of the idea sort of the cascade going for Boeing?
Robert Isom -- President
Yes, Ed. Over time, they will. We are working through what that looks like. I think at this point, we are probably not yet ready to reveal all of it.
But that is our long-term plan. That's long been our fleet plan and marketplace Chicago is exactly the kinds of the things we have in mind for it.
Edward Russell -- The Points Guy -- Senior Airline Business Reporter
Right. Thank you very much.
Operator
Thank you. And that does conclude our question-and-answer session for today's conference. I'd now like to turn the call back over to Doug Parker for any closing remarks.
Doug Parker -- Chairman and Chief Executive Officer
All right. Thank you all very much for your interest. And we appreciate it. And if you have any questions, either contact investor relations or corporate communications.
We will be happy to answer. Thank you very much.
Operator
[Operator signoff]
Duration: 82 minutes
Call participants:
Dan Cravens -- Managing Director of Investor Relations
Doug Parker -- Chairman and Chief Executive Officer
Robert Isom -- President
Derek Kerr -- Chief Financial Officer
Joseph DeNardi -- Stifel Financial Corp. -- Analyst
Brandon Oglenski -- Barclays -- Analyst
Vasu Raja -- Senior Vice President of Network Strategy
Jamie Baker -- J.P. Morgan -- Analyst
Darryl Genovesi -- Vertical Research Partners -- Analyst
Hunter Keay -- Wolfe Research -- Analyst
Duane Pfennigwerth -- Evercore ISI -- Analyst
Savi Syth -- Raymond James -- Analyst
Don Casey -- Senior Vice President of Revenue Management
Rajeev Lalwani -- Morgan Stanley -- Analyst
Mike Linenberg -- Deutsche Bank -- Analyst
Helane Becker -- Cowen and Company -- Analyst
Dan McKenzie -- Buckingham Research -- Analyst
David Vernon -- Sanford C. Bernstein -- Analyst
Alison Sider -- Wall Street Journal -- Analyst
Dawn Gilbertson -- U.S.A Today -- Journalist
Tracy Rucinski -- Reuters -- U.S. Aviation Correspondent
Edward Russell -- The Points Guy -- Senior Airline Business Reporter
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines Group (NASDAQ: AAL) Q3 2019 Earnings Call Oct 24, 2019, 8:30 a.m. Operator [Operator signoff] Duration: 82 minutes Call participants: Dan Cravens -- Managing Director of Investor Relations Doug Parker -- Chairman and Chief Executive Officer Robert Isom -- President Derek Kerr -- Chief Financial Officer Joseph DeNardi -- Stifel Financial Corp. -- Analyst Brandon Oglenski -- Barclays -- Analyst Vasu Raja -- Senior Vice President of Network Strategy Jamie Baker -- J.P. Morgan -- Analyst Darryl Genovesi -- Vertical Research Partners -- Analyst Hunter Keay -- Wolfe Research -- Analyst Duane Pfennigwerth -- Evercore ISI -- Analyst Savi Syth -- Raymond James -- Analyst Don Casey -- Senior Vice President of Revenue Management Rajeev Lalwani -- Morgan Stanley -- Analyst Mike Linenberg -- Deutsche Bank -- Analyst Helane Becker -- Cowen and Company -- Analyst Dan McKenzie -- Buckingham Research -- Analyst David Vernon -- Sanford C. Bernstein -- Analyst Alison Sider -- Wall Street Journal -- Analyst Dawn Gilbertson -- U.S.A Today -- Journalist Tracy Rucinski -- Reuters -- U.S. Aviation Correspondent Edward Russell -- The Points Guy -- Senior Airline Business Reporter More AAL analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. When fuel and special items were excluded, our unit cost increased in the third quarter by 4.8% compared to 2018 due primarily to higher salaries and benefits, maintenance and regional expense and lower-than-planned capacity.
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Operator [Operator signoff] Duration: 82 minutes Call participants: Dan Cravens -- Managing Director of Investor Relations Doug Parker -- Chairman and Chief Executive Officer Robert Isom -- President Derek Kerr -- Chief Financial Officer Joseph DeNardi -- Stifel Financial Corp. -- Analyst Brandon Oglenski -- Barclays -- Analyst Vasu Raja -- Senior Vice President of Network Strategy Jamie Baker -- J.P. Morgan -- Analyst Darryl Genovesi -- Vertical Research Partners -- Analyst Hunter Keay -- Wolfe Research -- Analyst Duane Pfennigwerth -- Evercore ISI -- Analyst Savi Syth -- Raymond James -- Analyst Don Casey -- Senior Vice President of Revenue Management Rajeev Lalwani -- Morgan Stanley -- Analyst Mike Linenberg -- Deutsche Bank -- Analyst Helane Becker -- Cowen and Company -- Analyst Dan McKenzie -- Buckingham Research -- Analyst David Vernon -- Sanford C. Bernstein -- Analyst Alison Sider -- Wall Street Journal -- Analyst Dawn Gilbertson -- U.S.A Today -- Journalist Tracy Rucinski -- Reuters -- U.S. Aviation Correspondent Edward Russell -- The Points Guy -- Senior Airline Business Reporter More AAL analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. American Airlines Group (NASDAQ: AAL) Q3 2019 Earnings Call Oct 24, 2019, 8:30 a.m. [Operator instructions] Before we begin, we must state that today's call does contain forward-looking statements, including statements concerning future revenues and costs, forecast of capacity traffic, load factor, fleet plans and fuel prices.
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Operator [Operator signoff] Duration: 82 minutes Call participants: Dan Cravens -- Managing Director of Investor Relations Doug Parker -- Chairman and Chief Executive Officer Robert Isom -- President Derek Kerr -- Chief Financial Officer Joseph DeNardi -- Stifel Financial Corp. -- Analyst Brandon Oglenski -- Barclays -- Analyst Vasu Raja -- Senior Vice President of Network Strategy Jamie Baker -- J.P. Morgan -- Analyst Darryl Genovesi -- Vertical Research Partners -- Analyst Hunter Keay -- Wolfe Research -- Analyst Duane Pfennigwerth -- Evercore ISI -- Analyst Savi Syth -- Raymond James -- Analyst Don Casey -- Senior Vice President of Revenue Management Rajeev Lalwani -- Morgan Stanley -- Analyst Mike Linenberg -- Deutsche Bank -- Analyst Helane Becker -- Cowen and Company -- Analyst Dan McKenzie -- Buckingham Research -- Analyst David Vernon -- Sanford C. Bernstein -- Analyst Alison Sider -- Wall Street Journal -- Analyst Dawn Gilbertson -- U.S.A Today -- Journalist Tracy Rucinski -- Reuters -- U.S. Aviation Correspondent Edward Russell -- The Points Guy -- Senior Airline Business Reporter More AAL analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. American Airlines Group (NASDAQ: AAL) Q3 2019 Earnings Call Oct 24, 2019, 8:30 a.m. Dan Cravens -- Managing Director of Investor Relations Thank you, and good morning, everyone, and welcome to the American Airlines Group third-quarter 2019earnings conference call With us in the room this morning is Doug Parker, chairman and CEO; Robert Isom, president; and Derek Kerr, our chief financial officer.
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Operator [Operator signoff] Duration: 82 minutes Call participants: Dan Cravens -- Managing Director of Investor Relations Doug Parker -- Chairman and Chief Executive Officer Robert Isom -- President Derek Kerr -- Chief Financial Officer Joseph DeNardi -- Stifel Financial Corp. -- Analyst Brandon Oglenski -- Barclays -- Analyst Vasu Raja -- Senior Vice President of Network Strategy Jamie Baker -- J.P. Morgan -- Analyst Darryl Genovesi -- Vertical Research Partners -- Analyst Hunter Keay -- Wolfe Research -- Analyst Duane Pfennigwerth -- Evercore ISI -- Analyst Savi Syth -- Raymond James -- Analyst Don Casey -- Senior Vice President of Revenue Management Rajeev Lalwani -- Morgan Stanley -- Analyst Mike Linenberg -- Deutsche Bank -- Analyst Helane Becker -- Cowen and Company -- Analyst Dan McKenzie -- Buckingham Research -- Analyst David Vernon -- Sanford C. Bernstein -- Analyst Alison Sider -- Wall Street Journal -- Analyst Dawn Gilbertson -- U.S.A Today -- Journalist Tracy Rucinski -- Reuters -- U.S. Aviation Correspondent Edward Russell -- The Points Guy -- Senior Airline Business Reporter More AAL analysis All earnings call transcripts This article is a transcript of this conference call produced for The Motley Fool. American Airlines Group (NASDAQ: AAL) Q3 2019 Earnings Call Oct 24, 2019, 8:30 a.m. And then after we hear from those comments, we'll open the call for analyst questions and, lastly, questions from the media.
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6318.0
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2019-10-24 00:00:00 UTC
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Why Shares of American Airlines Group Are Up Today
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AAL
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https://www.nasdaq.com/articles/why-shares-of-american-airlines-group-are-up-today-2019-10-24
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nan
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nan
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What happened
Shares of American Airlines Group (NASDAQ: AAL) gained altitude on Thursday after the U.S. airline reported third-quarter results that came in ahead of expectations. The airline has been hard hit by the grounding of Boeing's 737 MAX and ongoing labor woes but appears to be managing through the issues.
American shares traded up more than 5% at the open before falling back somewhat.
So what
Before markets opened on Thursday, American Airlines reported third-quarter earnings of $1.42 per share on revenue of $11.9 billion, beating the consensus earnings expectation by $0.03 per share on revenues that were in line with forecasts. Chairman and CEO Doug Parker said in a statement that the airline is "pleased" with the report. "However, we know that our results should have been better."
American Airlines Boeing 737 in flight. Image source: American Airlines.
Specifically, Parker mentioned the impact of the continued grounding of the 737 MAX and "operational challenges resulting from ongoing labor contract negotiations" as factors eating into results.
Without the 737 MAX, American has had to extend the flying lives of older, less-efficient planes, including two Boeing 767s and some Embraer E190s that were scheduled to be retired in 2019. That in turn is leading to higher costs. American reported third-quarter unit revenue up 2% but nonfuel unit costs up 4.8%, with profit negatively impacted by the 737 MAX by about $140 million.
Now what
On the postearnings callwith investors Thursday morning, Parker said American Airlines would act to make sure it is Boeing shareholders, not American Airlines shareholders, who bear the brunt of the expense related to the 737 MAX grounding.
American is also getting serious about paying down its industry-high debt burden, saying it expects adjusted debt to fall by upward of $4 billion over the next two years and by up to $10 billion over the next five years. That should help ease some of the biggest concerns lingering over American Airlines shares, as investors are loath to see an airline saddled with high debt heading into a potential economic slowdown.
Airline data by YCharts.
Shares of American Airlines have been poor performers among major airline stocks so far in 2019, weighed down by the airline's numerous challenges. American's third-quarter results illustrate both how great those challenges are and how hard management is working to navigate through them.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of American Airlines Group (NASDAQ: AAL) gained altitude on Thursday after the U.S. airline reported third-quarter results that came in ahead of expectations. The airline has been hard hit by the grounding of Boeing's 737 MAX and ongoing labor woes but appears to be managing through the issues. Without the 737 MAX, American has had to extend the flying lives of older, less-efficient planes, including two Boeing 767s and some Embraer E190s that were scheduled to be retired in 2019.
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What happened Shares of American Airlines Group (NASDAQ: AAL) gained altitude on Thursday after the U.S. airline reported third-quarter results that came in ahead of expectations. So what Before markets opened on Thursday, American Airlines reported third-quarter earnings of $1.42 per share on revenue of $11.9 billion, beating the consensus earnings expectation by $0.03 per share on revenues that were in line with forecasts. Specifically, Parker mentioned the impact of the continued grounding of the 737 MAX and "operational challenges resulting from ongoing labor contract negotiations" as factors eating into results.
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What happened Shares of American Airlines Group (NASDAQ: AAL) gained altitude on Thursday after the U.S. airline reported third-quarter results that came in ahead of expectations. Now what On the postearnings callwith investors Thursday morning, Parker said American Airlines would act to make sure it is Boeing shareholders, not American Airlines shareholders, who bear the brunt of the expense related to the 737 MAX grounding. Shares of American Airlines have been poor performers among major airline stocks so far in 2019, weighed down by the airline's numerous challenges.
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What happened Shares of American Airlines Group (NASDAQ: AAL) gained altitude on Thursday after the U.S. airline reported third-quarter results that came in ahead of expectations. So what Before markets opened on Thursday, American Airlines reported third-quarter earnings of $1.42 per share on revenue of $11.9 billion, beating the consensus earnings expectation by $0.03 per share on revenues that were in line with forecasts. American Airlines Boeing 737 in flight.
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6319.0
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2019-10-24 00:00:00 UTC
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American Airlines Q3 Adj. Earnings EPS Up 20% - Quick Facts
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AAL
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https://www.nasdaq.com/articles/american-airlines-q3-adj.-earnings-eps-up-20-quick-facts-2019-10-24
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(RTTNews) - American Airlines Group Inc. (AAL) reported that its third-quarter earnings per share, excluding net special items, grew 20 percent year over year to $1.42. On average, 18 analysts polled by Thomson Reuters expected the company to report profit per share of $1.39, for the quarter. Analysts' estimates typically exclude special items.
American Airlines CEO Doug Parker said: "We know that our results should have been better. Our third quarter was impacted by the continued grounding of the Boeing 737 MAX and the operational challenges resulting from ongoing labor contract negotiations."
The company recorded a 3 percent year-over-year increase in total revenue to a record $11.91 billion. Analysts expected revenue of $11.93 billion, for the quarter. Driven by a 3 percentage point increase in total passenger load factor, passenger revenue per available seat mile (PRASM) grew 3 percent, for the quarter. Total revenue per available seat mile (TRASM) was 15.71 cents, an increase of 2 percent year over year.
American Airlines expects its 2019 earnings per share excluding net special items to be between $4.50 and $5.50. Analysts expect the company to report profit per share of $4.98. American projects fourth-quarter TRASM to be flat to up 2 percent year over year.
The company also declared a dividend of 10 cents per share to be paid Nov. 20 to stockholders of record as of Nov. 6, 2019.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - American Airlines Group Inc. (AAL) reported that its third-quarter earnings per share, excluding net special items, grew 20 percent year over year to $1.42. On average, 18 analysts polled by Thomson Reuters expected the company to report profit per share of $1.39, for the quarter. Our third quarter was impacted by the continued grounding of the Boeing 737 MAX and the operational challenges resulting from ongoing labor contract negotiations."
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(RTTNews) - American Airlines Group Inc. (AAL) reported that its third-quarter earnings per share, excluding net special items, grew 20 percent year over year to $1.42. Total revenue per available seat mile (TRASM) was 15.71 cents, an increase of 2 percent year over year. American Airlines expects its 2019 earnings per share excluding net special items to be between $4.50 and $5.50.
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(RTTNews) - American Airlines Group Inc. (AAL) reported that its third-quarter earnings per share, excluding net special items, grew 20 percent year over year to $1.42. On average, 18 analysts polled by Thomson Reuters expected the company to report profit per share of $1.39, for the quarter. Total revenue per available seat mile (TRASM) was 15.71 cents, an increase of 2 percent year over year.
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(RTTNews) - American Airlines Group Inc. (AAL) reported that its third-quarter earnings per share, excluding net special items, grew 20 percent year over year to $1.42. Analysts expected revenue of $11.93 billion, for the quarter. Analysts expect the company to report profit per share of $4.98.
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6320.0
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2019-10-24 00:00:00 UTC
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American Airlines Group Inc Q3 adjusted earnings of $1.42 per share
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AAL
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https://www.nasdaq.com/articles/american-airlines-group-inc-q3-adjusted-earnings-of-%241.42-per-share-2019-10-24
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nan
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(RTTNews) - American Airlines Group Inc (AAL) announced a profit for its third quarter that rose from last year.
The company's profit came in at $425 million, or $0.96 per share. This compares with $372 million, or $0.81 per share, in last year's third quarter.
Excluding items, American Airlines Group Inc reported adjusted earnings of $630 million or $1.42 per share for the period.
The company's revenue for the quarter rose 3.0% to $11.91 billion from $11.56 billion last year.
American Airlines Group Inc earnings at a glance:
-Earnings (Q3): $630 Mln. vs. $547 Mln. last year. -EPS (Q3): $1.42 vs. $1.19 last year. -Revenue (Q3): $11.91 Bln vs. $11.56 Bln last year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - American Airlines Group Inc (AAL) announced a profit for its third quarter that rose from last year. Excluding items, American Airlines Group Inc reported adjusted earnings of $630 million or $1.42 per share for the period. American Airlines Group Inc earnings at a glance: -Earnings (Q3): $630 Mln.
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(RTTNews) - American Airlines Group Inc (AAL) announced a profit for its third quarter that rose from last year. Excluding items, American Airlines Group Inc reported adjusted earnings of $630 million or $1.42 per share for the period. The company's revenue for the quarter rose 3.0% to $11.91 billion from $11.56 billion last year.
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(RTTNews) - American Airlines Group Inc (AAL) announced a profit for its third quarter that rose from last year. This compares with $372 million, or $0.81 per share, in last year's third quarter. Excluding items, American Airlines Group Inc reported adjusted earnings of $630 million or $1.42 per share for the period.
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(RTTNews) - American Airlines Group Inc (AAL) announced a profit for its third quarter that rose from last year. This compares with $372 million, or $0.81 per share, in last year's third quarter. last year.
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6321.0
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2019-10-22 00:00:00 UTC
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The 3 Cheapest Stocks Warren Buffett Owns
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AAL
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https://www.nasdaq.com/articles/the-3-cheapest-stocks-warren-buffett-owns-2019-10-22
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nan
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Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) CEO Warren Buffett is a legend on Wall Street. In roughly six-and-a-half decades, the Oracle of Omaha grew his net worth from $10,000 to more than $81 billion. And, may I add, Berkshire Hathaway's share price appreciation over the years has created more than $400 billion in value for shareholders.
Buffett's investing style is unique on Wall Street for its relative simplicity. Rather than try to use fancy charting software, Buffett simply focuses his attention on a handful of sectors and industries within the market, learns the ins and outs of these sectors and industries, and purchases companies that he believes offer excellent value and competitive advantages. It may sound boring, but the data doesn't lie: Buy-and-hold investing can work wonders.
Although not all of Buffett's 47 currently held securities in Berkshire Hathaway's portfolio could be accurately described as "value stocks," many of them are. In fact, three Buffett stocks that can be rightly called his cheapest are currently valued at less than six times next year's projected earnings per share (EPS).
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Image source: The Motley Fool.
Teva Pharmaceutical Industries: 2.8 times next year's EPS
When it comes to cheap Buffett stocks, nothing tops brand-name and generic-drug producer Teva Pharmaceutical Industries (NYSE: TEVA). Following a more than 90% decline from its all-time highs set in the summer of 2016, Teva now trades at a mere 2.8 times Wall Street's consensus EPS forecast for 2020.
On the one hand, there's a very good reason Teva Pharmaceutical is so inexpensive. Namely, it's faced a veritable laundry list of problems over the past two years. In no particular order:
The company's debt levels ballooned following its acquisition of generic drugmaker Actavis;
Teva settled a bribery lawsuit with the U.S. Justice Department;
The company shelved its dividend and has reduced its adjusted EPS forecasts multiple times;
It's faced generic-drug pricing weakness; and
As the icing on the cake, it's being sued by 44 U.S. states over its role in supplying opioids to the marketplace.
In fact, Buffett himself didn't pick out Teva to add to Berkshire's portfolio. Buffett has a history of avoiding drug stocks because of the effort needed to stay abreast on clinical trial data. Rather, it was one of his trusted investment managers who made the purchase.
However, Teva may still surprise the naysayers. Turnaround specialist CEO Kare Schultz has reduced Teva's net debt by $8 billion in two years, and the company is on track to have lowered its full-year operating expenses by $3 billion. All the while, Teva has remained very profitable on an adjusted basis and expects operating cash flow to improve after a trough year in 2019.
Teva is also a generic-drug giant, which should favor the company over the long run. Since brand-name drugs have a finite period of patent protection, Teva's generic reach and portfolio breadth continue to grow.
Image source: American Airlines.
American Airlines Group: 5.2 times next year's EPS
Another exceptionally cheap stock that Buffett owns is American Airlines Group (NASDAQ: AAL) at just over five times next year's EPS, according to Wall Street's consensus. Unlike Teva, American Airlines is a company picked out by Buffett.
Buffett first began adding shares of airlines, including American Airlines, to Berkshire's portfolio during the third quarter of 2016. The logic here is that West Texas Intermediate crude prices had briefly crashed below $30 a barrel earlier in 2016. With fuel expenses being the biggest single cost for airlines, this opened the door for significant margin expansion.
Additionally, a number of airlines have faded away in recent decades due to bankruptcy. As the field of competitors has shrunk, it's arguably helped to bolster the pricing power of the remaining major airlines. And since this is a cyclical industry, the longest economic expansion in U.S. history has allowed companies like American Airlines to fly high.
But there are reasons American Airlines is valued at only 5.2 times next year's EPS. For starters, it's lugging around more net debt than any other airline at $29.3 billion. This gives the company far less financial flexibility than its peers.
Airlines like American also have a very poor track record when recessions strike. It's a business that requires a lot of capital to operate, but that often returns very low margins. When coupled with high debt levels, American Airlines may very well be a value trap.
The 2019 Chevrolet LT Trail Boss. Image source: General Motors.
General Motors: 5.6 times next year's EPS
A third incredibly cheap stock in Buffett's portfolio is Detroit automaker General Motors (NYSE: GM). Automakers have, historically, traded at single-digit forward price-to-earnings ratios. However, General Motors' forward P/E ratio of 5.6 is modestly below its five-year average forward P/E ratio of 6.1.
Like American Airlines, General Motors is a cyclical company, meaning it tends to do well when the U.S. and global economy are expanding. Therefore GM has been able to take advantage of the longest expansion in U.S. history, as well as historically low lending rates, to grow its business. These lending rates not only mean paying less on the company's existing debt, but it's allowed consumers to finance new vehicles, rather than buying used cars, without draining their pocketbooks.
Furthermore, GM has benefited from more moderate crude prices, just as airlines have. Lower prices at the pump, along with innovative and more fuel-efficient engines, have encouraged consumers to purchase trucks and SUVs instead of sedans. That's great news for GM considering that trucks and SUVs bear juicier margins than smaller sedans. Perhaps unsurprisingly, GM is also one of Buffett's top high-yield dividend stocks.
But, once again, there are reasons General Motors is so relatively inexpensive. For one, it's contending with the longest labor strike in roughly two decades with the United Auto Workers. Through the first 30 days of the strike, it's cost the company about $2 billion. Thankfully, these aren't recurring costs and should make for some delectable year-over-year comparisons next year.
The bigger worry might be that GM's sales in China are floundering. Once viewed as the perfect hedge to a peak in auto sales in the U.S. market, General Motors has seen its China sales decline in five consecutive quarters, including a 17.5% drop in the third quarter of 2019 when compared to the prior-year quarter. Without this high-growth safety valve, GM's near-term growth prospects have hit the skids.
10 stocks we like better than General Motors
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and General Motors wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Sean Williams owns shares of Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines Group: 5.2 times next year's EPS Another exceptionally cheap stock that Buffett owns is American Airlines Group (NASDAQ: AAL) at just over five times next year's EPS, according to Wall Street's consensus. Following a more than 90% decline from its all-time highs set in the summer of 2016, Teva now trades at a mere 2.8 times Wall Street's consensus EPS forecast for 2020. In no particular order: The company's debt levels ballooned following its acquisition of generic drugmaker Actavis; Teva settled a bribery lawsuit with the U.S. Justice Department; The company shelved its dividend and has reduced its adjusted EPS forecasts multiple times; It's faced generic-drug pricing weakness; and As the icing on the cake, it's being sued by 44 U.S. states over its role in supplying opioids to the marketplace.
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American Airlines Group: 5.2 times next year's EPS Another exceptionally cheap stock that Buffett owns is American Airlines Group (NASDAQ: AAL) at just over five times next year's EPS, according to Wall Street's consensus. Teva Pharmaceutical Industries: 2.8 times next year's EPS When it comes to cheap Buffett stocks, nothing tops brand-name and generic-drug producer Teva Pharmaceutical Industries (NYSE: TEVA). General Motors: 5.6 times next year's EPS A third incredibly cheap stock in Buffett's portfolio is Detroit automaker General Motors (NYSE: GM).
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American Airlines Group: 5.2 times next year's EPS Another exceptionally cheap stock that Buffett owns is American Airlines Group (NASDAQ: AAL) at just over five times next year's EPS, according to Wall Street's consensus. Teva Pharmaceutical Industries: 2.8 times next year's EPS When it comes to cheap Buffett stocks, nothing tops brand-name and generic-drug producer Teva Pharmaceutical Industries (NYSE: TEVA). General Motors: 5.6 times next year's EPS A third incredibly cheap stock in Buffett's portfolio is Detroit automaker General Motors (NYSE: GM).
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American Airlines Group: 5.2 times next year's EPS Another exceptionally cheap stock that Buffett owns is American Airlines Group (NASDAQ: AAL) at just over five times next year's EPS, according to Wall Street's consensus. Teva Pharmaceutical Industries: 2.8 times next year's EPS When it comes to cheap Buffett stocks, nothing tops brand-name and generic-drug producer Teva Pharmaceutical Industries (NYSE: TEVA). General Motors: 5.6 times next year's EPS A third incredibly cheap stock in Buffett's portfolio is Detroit automaker General Motors (NYSE: GM).
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6322.0
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2019-10-16 00:00:00 UTC
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Noteworthy Wednesday Option Activity: HIIQ, AAL, ISRG
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AAL
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https://www.nasdaq.com/articles/noteworthy-wednesday-option-activity%3A-hiiq-aal-isrg-2019-10-16
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nan
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Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in Health Insurance Innovations Inc (Symbol: HIIQ), where a total volume of 4,472 contracts has been traded thus far today, a contract volume which is representative of approximately 447,200 underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 81.6% of HIIQ's average daily trading volume over the past month, of 548,310 shares. Especially high volume was seen for the $35 strike call option expiring January 17, 2020, with 952 contracts trading so far today, representing approximately 95,200 underlying shares of HIIQ. Below is a chart showing HIIQ's trailing twelve month trading history, with the $35 strike highlighted in orange:
American Airlines Group Inc (Symbol: AAL) saw options trading volume of 53,741 contracts, representing approximately 5.4 million underlying shares or approximately 80.3% of AAL's average daily trading volume over the past month, of 6.7 million shares. Particularly high volume was seen for the $29 strike call option expiring November 15, 2019, with 9,246 contracts trading so far today, representing approximately 924,600 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $29 strike highlighted in orange:
And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 4,167 contracts, representing approximately 416,700 underlying shares or approximately 75.2% of ISRG's average daily trading volume over the past month, of 553,940 shares. Particularly high volume was seen for the $570 strike call option expiring October 25, 2019, with 206 contracts trading so far today, representing approximately 20,600 underlying shares of ISRG. Below is a chart showing ISRG's trailing twelve month trading history, with the $570 strike highlighted in orange:
For the various different available expirations for HIIQ options, AAL options, or ISRG options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $29 strike call option expiring November 15, 2019, with 9,246 contracts trading so far today, representing approximately 924,600 underlying shares of AAL. Below is a chart showing HIIQ's trailing twelve month trading history, with the $35 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) saw options trading volume of 53,741 contracts, representing approximately 5.4 million underlying shares or approximately 80.3% of AAL's average daily trading volume over the past month, of 6.7 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $29 strike highlighted in orange: And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 4,167 contracts, representing approximately 416,700 underlying shares or approximately 75.2% of ISRG's average daily trading volume over the past month, of 553,940 shares.
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Below is a chart showing HIIQ's trailing twelve month trading history, with the $35 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) saw options trading volume of 53,741 contracts, representing approximately 5.4 million underlying shares or approximately 80.3% of AAL's average daily trading volume over the past month, of 6.7 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $29 strike highlighted in orange: And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 4,167 contracts, representing approximately 416,700 underlying shares or approximately 75.2% of ISRG's average daily trading volume over the past month, of 553,940 shares. Below is a chart showing ISRG's trailing twelve month trading history, with the $570 strike highlighted in orange: For the various different available expirations for HIIQ options, AAL options, or ISRG options, visit StockOptionsChannel.com.
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Below is a chart showing HIIQ's trailing twelve month trading history, with the $35 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) saw options trading volume of 53,741 contracts, representing approximately 5.4 million underlying shares or approximately 80.3% of AAL's average daily trading volume over the past month, of 6.7 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $29 strike highlighted in orange: And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 4,167 contracts, representing approximately 416,700 underlying shares or approximately 75.2% of ISRG's average daily trading volume over the past month, of 553,940 shares. Particularly high volume was seen for the $29 strike call option expiring November 15, 2019, with 9,246 contracts trading so far today, representing approximately 924,600 underlying shares of AAL.
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Below is a chart showing HIIQ's trailing twelve month trading history, with the $35 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) saw options trading volume of 53,741 contracts, representing approximately 5.4 million underlying shares or approximately 80.3% of AAL's average daily trading volume over the past month, of 6.7 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $29 strike highlighted in orange: And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 4,167 contracts, representing approximately 416,700 underlying shares or approximately 75.2% of ISRG's average daily trading volume over the past month, of 553,940 shares. Particularly high volume was seen for the $29 strike call option expiring November 15, 2019, with 9,246 contracts trading so far today, representing approximately 924,600 underlying shares of AAL.
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6323.0
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2019-10-16 00:00:00 UTC
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American Airlines Lifts Its Q3 Forecast
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AAL
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https://www.nasdaq.com/articles/american-airlines-lifts-its-q3-forecast-2019-10-16
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nan
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American Airlines (NASDAQ: AAL) investors have endured lots of disappointment over the past several years. They have faced more of the same in 2019, with labor strife and the grounding of the Boeing (NYSE: BA) 737 MAX weighing heavily on the company's profitability. Whereas American Airlines entered the year expecting to produce adjusted earnings per share between $5.50 and $7.50, analysts now expect EPS to come in around the $5 mark.
Fortunately, American Airlines did offer some good news in an investor update posted last week. The airline giant said that it expects its third-quarter pre-tax margin to reach the upper half of the guidance range it had provided in late July. This suggests that American finally may be close to stabilizing its business.
Management nudges guidance higher
Back in July, American Airlines projected that revenue per available seat mile (RASM) would rise 1% to 3% in the third quarter, roughly in line with the 2.1% RASM gain it achieved in the first half of the year. Meanwhile, the company said that adjusted nonfuel unit costs would rise 4% to 6% year over year, partly because it was forced to reduce its capacity growth due to the Boeing 737 MAX grounding. Lower fuel prices are offsetting some of this cost pressure.
Factoring in all of those elements, American's initial forecast called for a Q3 pre-tax margin between 5.5% and 7.5%. For comparison, the carrier posted a 6% pre-tax margin in the prior-year period.
Last Wednesday, American narrowed its revenue guidance range. It said that RASM rose 1.5% to 2.5% last quarter, despite the negative impact of Hurricane Dorian, which hit Florida on Labor Day weekend. The company left its nonfuel cost guidance intact and reduced its fuel cost estimate by $0.02 per gallon. As a result, American Airlines now expects its adjusted pre-tax margin to come in between 6.5% and 7.5% for the quarter.
Image source: American Airlines.
Boeing 737 MAX grounding costs continue to rise
American Airlines had to cancel 9,475 flights last quarter, due to the grounding of its 24 Boeing 737 MAX 8s and the delayed delivery of the 16 additional 737 MAX jets it was supposed to receive in 2019. The company estimates that this reduced its pre-tax profit by about $140 million last quarter. This brings the running tally of the 737 MAX grounding's cost to $395 million.
Additionally, the airline pushed back its estimate for the Boeing 737 MAX's return to service to Jan. 16, 2020. That means it will be forced to run a reduced schedule during the busy Thanksgiving and Christmas travel periods.
Thus, investors should expect another big earnings hit in the fourth quarter from the 737 MAX grounding, particularly because the carrier retired all of its remaining MD-80s last month. This will likely push the full-year pre-tax cost of the grounding beyond $500 million, compared to the airline's most recent estimate of $400 million.
What the update means for investors
The Boeing 737 MAX grounding negatively impacted American Airlines' pre-tax margin by a little more than 1 percentage point last quarter. However, even adjusting for that headwind, the company would have posted a single-digit pre-tax margin in what is typically one of the most profitable parts of the year. This highlights American's continuing underperformance within the U.S. airline industry.
Nevertheless, it's encouraging that American Airlines was able to improve its quarterly earnings guidance even though Hurricane Dorian impacted one of its hubs on a busy travel weekend. The carrier's effort to expand at its highly profitable hub in Dallas-Fort Worth seems to be succeeding. This bodes well for American's plan to grow in Charlotte and Washington, D.C. -- its other two most-successful hubs -- over the next two years.
The Boeing 737 MAX should be able to return to service early next year, enabling American Airlines to get back to a fairly normal schedule in time for the peak spring and summer travel seasons. This should lead to better unit cost performance beginning next year. The airline is also in line to receive compensation for its losses from Boeing, which will provide an earnings boost in the future.
American Airlines is still a long way from matching its peers in terms of profitability. However, investors can at least take comfort that it is starting to move in the right direction -- and the return of the Boeing 737 MAX next year could be the spark needed to accelerate the company's earnings growth.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg is long January 2020 $20 calls on American Airlines Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (NASDAQ: AAL) investors have endured lots of disappointment over the past several years. What the update means for investors The Boeing 737 MAX grounding negatively impacted American Airlines' pre-tax margin by a little more than 1 percentage point last quarter. The Boeing 737 MAX should be able to return to service early next year, enabling American Airlines to get back to a fairly normal schedule in time for the peak spring and summer travel seasons.
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American Airlines (NASDAQ: AAL) investors have endured lots of disappointment over the past several years. Meanwhile, the company said that adjusted nonfuel unit costs would rise 4% to 6% year over year, partly because it was forced to reduce its capacity growth due to the Boeing 737 MAX grounding. Boeing 737 MAX grounding costs continue to rise American Airlines had to cancel 9,475 flights last quarter, due to the grounding of its 24 Boeing 737 MAX 8s and the delayed delivery of the 16 additional 737 MAX jets it was supposed to receive in 2019.
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American Airlines (NASDAQ: AAL) investors have endured lots of disappointment over the past several years. Boeing 737 MAX grounding costs continue to rise American Airlines had to cancel 9,475 flights last quarter, due to the grounding of its 24 Boeing 737 MAX 8s and the delayed delivery of the 16 additional 737 MAX jets it was supposed to receive in 2019. What the update means for investors The Boeing 737 MAX grounding negatively impacted American Airlines' pre-tax margin by a little more than 1 percentage point last quarter.
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American Airlines (NASDAQ: AAL) investors have endured lots of disappointment over the past several years. Boeing 737 MAX grounding costs continue to rise American Airlines had to cancel 9,475 flights last quarter, due to the grounding of its 24 Boeing 737 MAX 8s and the delayed delivery of the 16 additional 737 MAX jets it was supposed to receive in 2019. The company estimates that this reduced its pre-tax profit by about $140 million last quarter.
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Nobel Prizes, PayPal Investments, and Max Delays
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https://www.nasdaq.com/articles/nobel-prizes-paypal-investments-and-max-delays-2019-10-14
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The Nobel Prize in chemistry generates some electricity. American Airlines (NASDAQ: AAL) deals with turbulence over the 737 Max. And PayPal (NASDAQ: PYPL) writes down an Uber (NYSE: UBER) investment. Motley Fool analysts Emily Flippen and Jim Mueller discuss those stories and debate the merits of no-frills airlines.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
{% render_component 'sa-returns-as-of' type='rg'%}
This video was recorded on Oct. 9, 2019.
Mac Greer: It's Wednesday, Oct. 9. Welcome to MarketFoolery! I'm Mac Greer, and I am joined in studio by Motley Fool analysts Emily Flippen and Jim Mueller. How are we doing today?
Emily Flippen: All right!
Jim Mueller: Hey, Mac! Doing great!
Greer: Good! We've got lots to talk about. We're going to talk some PayPal and Uber. We're also going to go to The Fool labs to talk Nobel Prize winners. I'm not sure we've ever talked about the Nobel Prize, at least on MarketFoolerys I've hosted.
Mueller: We should!
Greer: We should, and we're going to. It has some business implications. I don't want to give it away. We're going to be talking some Nobel Prize.
But let's begin with the airlines, American Airlines. News that American has pulled the Boeing 737 Max from its schedule until mid-January. Now, Emily, the 737 Max has been removed from all airline schedules, has not been allowed to fly since mid-March. That part isn't news. The news is that it's going to be until mid-January for American; Southwest won't be flying the 737 Max until Jan. 5; United until Dec. 19. What do you make of the American news and the 737 Max?
Flippen: This means for American Airlines that they're going to be having to cancel about 140 flights a day on average. It's definitely financially impacting the company. This is par for the course, as you've been seeing right now, but American Airlines really can't afford this type of setback. Its biggest competitor right now actually seems to be Delta. The fact is, Delta didn't have a single Boeing 737 Max in their fleet when this happened, so Delta has been picking up a lot of slack from these airlines while they've been canceling all these slides. It's adding a little bit of salt to the wound here. Just a couple of days ago, Delta actually closed on its $2 billion deal with LATAM Airlines, the largest Latin American airline, giving them a 20% stake in the business in a highly coveted spot in these growing countries like Brazil, Argentina, Chile. American Airlines previously had a partnership with LATAM for those areas. It's one step back after another for American Airlines right now.
Greer: American's problems go well beyond the 737 Max, it sounds like.
Flippen: It does. We're talking not just about management, cultural issues, 737. We're also talking about their international expansion. It goes back to LATAM in the sense that American wants to be in growing markets. In Latin America, eight out of every 10 flights heads to countries like the United States and North America. That's a huge market. If they start to lose where they did previously have a little bit of an advantage to companies like Delta, it's really going to start hurting their bottom line.
Greer: As we close, let's talk about the stock. Shares of American down over the past five years. Now, the stock's been incredibly volatile. Today, it trades below where it did five years ago. When you compare that to United, Delta, Southwest, all up over the past five years. Going forward, do you have a favorite airlines stock?
Flippen: I definitely have a favorite airline. If anybody knows me, they know I love budget airlines. Before I talk about Spirit again -- which I will be flying later this year when I head back home for a wedding -- I think my favorite airlines stocks is actually Wizz Air. I did also fly this around this time last year. Jim just made a look at me --
Greer: Are you making that up?
Flippen: I am not! Wizz Air is a real airline!
Mueller: Never heard of it.
Flippen: I think it's Hungarian. It's a budget European airline. On that trip, I flew WOW, and then Wizz. One of those companies is no longer in business. It's not Wizz. But Wizz is really interesting. They track really great in airline metrics, which is the cost per available seat mile. I guess for Wizz that's more like the cost per available seat kilometer. Either way, it's really low for the industry. They're doing a great job keeping up their efficiencies, being a budget airline. As a frequent traveler myself, I love airlines that can do that on a budget.
Greer: You mentioned Spirit. Talk to me about Spirit.
Flippen: [laughs] I can never mention Spirit on this show without it coming back at me.
Greer: I've never flown Spirit, but I just have this vision that I'm going to get charged to go to the bathroom. True or false? Do they basically charge you for everything?
Flippen: False for right now, but by the time this airs -- [laughs] Look, budget airlines get a lot of flak because they're the companies that make a lot of their revenue from these additional sales. They charge for drinks, they charge for bags, they charge for early check-in, seat selection. But if you're somebody who's conscious of that, and aware of that, it saves hundreds of dollars on your plane ticket if you're willing to give up those little luxuries. As someone like myself, I will give up those little luxuries for a few hundred dollars.
Mueller: Well, you're young, OK?
Flippen: [laughs] That's true.
Mueller: I don't know how much you've flown. I'm not as young as you are. I am willing to pay up for those extra benefits, where I don't have to worry about being nickeled and dimed to death. And if the airline makes extra money on it, so be it. I traveled so much in coach in my previous job, flying all over the country, in Canada, and even down to Puerto Rico a couple of times. I've come to cherish first class. So I've made a pledge that, I don't fly nearly as often, and I can save up the money, I'll pay up for first class, just for the comfort and the convenience.
Greer: Jim, do you have a favorite stock or a favorite airline?
Mueller: For flying, first class.
Greer: [laughs] Nice!
Mueller: I like Hawaiian and I like using them to the islands where my wife's family is.
Greer: All right. Let's move on to PayPal. PayPal is writing down a $228 million investment in Uber, an investment that PayPal made right before Uber went public in May. If you haven't been following the Uber story, the whole public company thing, not going so well. Shares of Uber trading well below their IPO price. So Jim, what does it mean for investors? What does PayPal's writedown mean?
Mueller: We'll talk about Uber in just a moment. What PayPal is doing is basically marking to market their investment in Uber. By that I mean, they bought shares in Uber at the IPO price of $45. They invested $500 million. They've got about 11.1 million shares on that. As of last night, those shares are now worth $30.47, or about $340 million. They have to adjust their balance sheet by a $161 million drop. That's going to show up in non-operating earnings, other stuff. It still will lower the net income that PayPal expects to report.
On the other hand, if Uber's shares ever decide to go up, then PayPal will be allowed to write up this investment, which is not the same as if they were making an impairment on an asset or a purchase, like they bought a company, they incorporated an entire company unto itself, and then they realized they made a mistake and had to write down the value of that purchase. That's a permanent loss. With a mark-to-market loss, they can move it back up if the shares ever go back up.
Greer: OK, so it sounds bad, but it may not turn out to be that bad if Uber shares come back?
Mueller: Right. This is going to happen every quarter with both Uber and with their other public investment in MercadoLibre. Part of this $228 million comes from about a $67 million loss in its investment in MercadoLibre. So as those two companies' shares go up and down, the value of the investments carried on the books will also go up and down. It's going to be a thing for PayPal going forward. Any analyst is going to know enough to back out those kinds of shifts to see what PayPal itself is doing.
Flippen: This is another great way for people who are bearish on Uber to point to how horrible it's been as an investment. You have nobody doing the same for MercadoLibre. Jim's right, this is short-term market movements. And it goes back to the idea of, OK, PayPal invested $500 million at the IPO price for Uber. It's down significantly from there. Is it a bad investment? We don't judge our investments based on such a short time horizon. Why would we judge a company's investments based on such a short time horizon? In a lot of ways, Uber, while it is an unprofitable company, it passes what David Gardner likes to call "the snap test." If you snapped your fingers right now, and that company were to disappear, would your lives change substantially?
Mueller: No.
Flippen: Well, a lot of people's would, and I would say the market in general would. So, I think these companies actually have a lot more pricing power than they realize right now. Right now, Uber and Lyft have been competing on price for so long, giving so many rider incentives, that they're both unprofitable. At some point, they're going to raise prices for consumers, and consumers are going to have to pay up for their Uber trips. Ultimately, I think they're going to realize that the value that Uber and Lyft provide in society today has been undervalued, underpaid for by those people who are using rideshare.
Mueller: Let me expand a little bit upon my "no" -- it's because I would use Lyft instead.
Flippen: Lyft could then raise their prices. If Uber disappeared tomorrow, Lyft would have no competition.
Greer: They're going to end up consolidating, right? This feels like a Sirius XM. That at some point, Uber and Lyft, they have to combine, right?
Flippen: I don't know if I agree with that, actually.
Mueller: Maybe. I don't think regulators would allow that to happen. They need the competition. Otherwise the pricing power goes through the roof and they'll just raise prices once they get rid of all the taxi companies.
Greer: We close with a major award. The Nobel Prize in chemistry was awarded on Wednesday to John Goodenough, M. Stanley Whittingham, and Akira Yoshino for their work on the development of lithium ion batteries. Now, Jim Mueller, you have a Ph.D. in molecular biology and biochemistry. That's one degree. One degree more than me. One Ph.D. more than me. This is a story about science, but it's also a story that has huge business implications.
Mueller: Not only in business, but lifestyle implications. What these three gentlemen did over the years, starting off with Whittingham, at Exxon of all places, was develop a battery that has a high energy density, requires low maintenance, and does not discharge on its own, what's called self-discharge. It doesn't do that very much. And it's rechargeable hundreds and hundreds of times over its lifetime. They replaced the original rechargeable batteries based on nickel-cadmium. You and I might remember those. They were basically good enough for an introductory battery, but the lithium ion far outpaces it. Following Sony's commercialization of the first one in 1991, lithium ion has replaced the nickel-cadmium chemistry.
Greer: So if I have if a cellphone, if I have an iPhone, then I have these gentlemen to thank?
Mueller: Yeah. If you have a cellphone, if you have a computer like our computers here in the studio, without plugs, portable electronics of all kinds, electric vehicles, cars and trucks, even electric tools, hand tools, drills, screwdrivers, those are all lithium ion batteries. And pacemakers. They have a nice, long lifetime of five to 10 years, the kind they use in pacemakers. They need to be replaced. A quick aside, they're exploring rechargeable pacemakers, where they're using the heart's pumping action to recharge the battery so you don't ever have to get it replaced. That's pretty cool, I think.
Greer: That is very cool. I know and I want to let you share a quote, because there was a great quote about the Nobel Prize win. I want to give you an opportunity to share that.
Mueller: One of the gentlemen, a professor of chemistry from Linnaeus University, Olof Ramstrom, said, "This is a highly charged story with tremendous potential." As a science nerd, I love that because it's two puns for the price of one.
Greer: I love that. But, when we talk lithium batteries, there are positives and there are negatives.
Mueller: Yeah. The positives -- Oh, OK. That one flew right by me. Good for you, Mac! Not as nerdy as the Linnaeus professor's quote, but still pretty good. But, they require some safeguards to make sure they don't catch on fire. You may remember the Galaxy Note 7 catching on fire -- in people's pockets, no less. Very dangerous. Even Boeing had battery fires on some of their 787s when they first came out, just because of the issues with the batteries. One of the issues is that they can discharge too quickly, and you can overcharge them. In both cases, too much current comes out or is put in too quickly, and the batteries heat up and then can catch on fire. We've seen that not only with the small fires on the Galaxy Note 7, but also some big fires from like Tesla's cars. There's issues.
Flippen: I don't have a Ph.D., but I do know that anytime you put a battery in my pocket, the less it can catch fire, and the quicker it can hold its charge, probably the better for me as a consumer. I think the battery industry in general has been really overdue for a rehaul.
Greer: That's a plus.
Flippen: [laughs] It's a plus.
Mueller: One of the things is that lithium and cobalt, one of the other chemicals used in the battery, are in kind of tight supply, and getting tighter. Apple, for instance, I believe, bought a cobalt mine in Africa a couple of years ago so that they could have a steady supply of one of the ingredients in these batteries. Many of these batteries are manufactured in China. Panasonic is a big one, they're a Japanese firm. They're the firm that provides Tesla with its batteries. BYD and Samsung, Nokia, Motorola, Kyocera, they all manufacture batteries for either vehicles or smartphones or drills and hand tools and things like that.
Greer: As we wrap up here, obviously, this story and research and the development of lithium batteries, just huge business implications. I want to bring it back to the Nobel Prize. I'm awarding you a Nobel Prize. It can be for anything. What do you want? What do you want to win the Nobel Prize for?
Flippen: Ideally, I'd want to win a Nobel Prize for great stock picking. Realistically, what I could win a Nobel Prize for is weird body contortions. No, seriously! Seriously! I can do stuff like swallow my tongue.
Greer: It's a new category -- swallow your tongue?
Flippen: I can swallow my tongue! It's weird, right? I can turn both my feet all the way inward.
Greer: Be careful. Isn't that dangerous?
Flippen: I haven't choked yet!
Mueller: We're filming today, right? It's no longer just a radio show?
Flippen: [laughs] It's not pretty to look at.
Greer: Anytime you have to use this sentence, "I haven't choked yet," you're probably doing something you shouldn't be doing.
Flippen: [laughs] Probably.
Greer: Wow! OK. So, weird body contortions.
Flippen: I'll take that prize.
Greer: I like it! Jim?
Mueller: I think there should be a Nobel for education, for educators. I'd like to win it. I love teaching people what's going on and so on.
Greer: I like that!
Mueller: There are so many great teachers, and we need teachers to educate the youth of the world, not just here in America, in Europe and Asia and Africa and all around the world. Australia. I forgot Australia. Sorry, guys!
Flippen: Can I change my answer? [laughs]
Mueller: [laughs] So, it'd be really cool, not only for the advancements of science, which is what a lot of the Nobel prizes are for; but also the advancement of human potential, I think should have a Nobel Prize.
Greer: I like that! I think I'd like to win mine for fun. A Nobel prize for fun.
Flippen: Swallowing your tongue is not fun?
Greer: No, that's fun.
Flippen: Then you might have some competition.
Greer: We could share the prize. I like that! You have to bring your own fun in life.
Mueller: Sure, sure. Pull away from my serious talk.
Greer: [laughs] OK, so, as we wrap up, the desert island question's a little tricky this week. I'm going to give you a few stocks. If you're on a desert island for the next five years, which one are you going with? Let's go Boeing, American Airlines, PayPal, and Uber.
Mueller: PayPal, in an instant.
Greer: Wow, didn't even hesitate!
Flippen: PayPal is a great company. But you know what? I think I'm going to actually go with Boeing. These are serious issues for Boeing right now, but they are in an oligopoly with Airbus, and I think that gives them a really strong competitive position.
Mueller: I like Boeing. That would be my No. 2 choice over the other two. But I choose PayPal because they're revolutionizing the way people pay each other. As Jason Moser likes to say, the war on cash. I think it has a great potential in front of it.
Greer: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Emily and Jim, thanks for joining me today!
Mueller: Thank you, Mac!
Flippen: Thank you for having me!
Greer: That's it for this edition of MarketFoolery! This show is mixed by Dan Boyd. I'm Mac Greer. Thanks for listening! And we will see you tomorrow!
Emily Flippen has no position in any of the stocks mentioned. Jim Mueller, CFA owns shares of Hawaiian Holdings, MercadoLibre, and PayPal Holdings and has the following options: long January 2021 $150 calls on Apple, short January 2021 $160 calls on Apple, short December 2019 $490 puts on MercadoLibre, short January 2020 $110 puts on PayPal Holdings, short January 2020 $82.50 puts on PayPal Holdings, short January 2021 $200 calls on Tesla, long January 2021 $200 puts on Tesla, short January 2021 $230 calls on Tesla, long January 2021 $230 puts on Tesla, short January 2021 $240 puts on Tesla, and long January 2021 $270 puts on Tesla. Mac Greer owns shares of Apple and MercadoLibre. The Motley Fool owns shares of and recommends Apple, Delta Air Lines, MercadoLibre, PayPal Holdings, Southwest Airlines, Spirit Airlines, and Tesla. The Motley Fool owns shares of Nokia and has the following options: short October 2019 $97 calls on PayPal Holdings, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool recommends Hawaiian Holdings, Sirius XM Radio, and Uber Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (NASDAQ: AAL) deals with turbulence over the 737 Max. The Nobel Prize in chemistry was awarded on Wednesday to John Goodenough, M. Stanley Whittingham, and Akira Yoshino for their work on the development of lithium ion batteries. What these three gentlemen did over the years, starting off with Whittingham, at Exxon of all places, was develop a battery that has a high energy density, requires low maintenance, and does not discharge on its own, what's called self-discharge.
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American Airlines (NASDAQ: AAL) deals with turbulence over the 737 Max. Jim Mueller, CFA owns shares of Hawaiian Holdings, MercadoLibre, and PayPal Holdings and has the following options: long January 2021 $150 calls on Apple, short January 2021 $160 calls on Apple, short December 2019 $490 puts on MercadoLibre, short January 2020 $110 puts on PayPal Holdings, short January 2020 $82.50 puts on PayPal Holdings, short January 2021 $200 calls on Tesla, long January 2021 $200 puts on Tesla, short January 2021 $230 calls on Tesla, long January 2021 $230 puts on Tesla, short January 2021 $240 puts on Tesla, and long January 2021 $270 puts on Tesla. The Motley Fool owns shares of and recommends Apple, Delta Air Lines, MercadoLibre, PayPal Holdings, Southwest Airlines, Spirit Airlines, and Tesla.
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American Airlines (NASDAQ: AAL) deals with turbulence over the 737 Max. I'm Mac Greer, and I am joined in studio by Motley Fool analysts Emily Flippen and Jim Mueller. Jim Mueller, CFA owns shares of Hawaiian Holdings, MercadoLibre, and PayPal Holdings and has the following options: long January 2021 $150 calls on Apple, short January 2021 $160 calls on Apple, short December 2019 $490 puts on MercadoLibre, short January 2020 $110 puts on PayPal Holdings, short January 2020 $82.50 puts on PayPal Holdings, short January 2021 $200 calls on Tesla, long January 2021 $200 puts on Tesla, short January 2021 $230 calls on Tesla, long January 2021 $230 puts on Tesla, short January 2021 $240 puts on Tesla, and long January 2021 $270 puts on Tesla.
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American Airlines (NASDAQ: AAL) deals with turbulence over the 737 Max. Even Boeing had battery fires on some of their 787s when they first came out, just because of the issues with the batteries. Let's go Boeing, American Airlines, PayPal, and Uber.
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2019-10-14 00:00:00 UTC
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3 Stocks Warren Buffett Was Wrong About
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AAL
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https://www.nasdaq.com/articles/3-stocks-warren-buffett-was-wrong-about-2019-10-14
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This article was first published by MyWallSt. Do you want access to 25 years of market-beating experience in one day? Find out more about MyWallSt's exclusive InPerson November event!
Though the Oracle of Omaha is widely considered to be the greatest investor of all time, even he managed to make a few mistakes. Here's a look at three of them.
1. ConocoPhillips
Warren Buffett's decision to buy a large stake in multinational energy conglomerate ConocoPhillips (NYSE: COP) was not a mistake because he bought it, but rather that he bought the stock at the wrong price. The general idea was that Buffett was making a play for future energy prices, with many believing that oil prices would only increase over the long term. However, this did not play out.
Image source: Unsplash.
ConocoPhillips was Buffett's way of benefiting from the expected jump in oil prices. The company was and still is very successful, but buying stocks in a great company does not make a great investment. Since crude oil prices were well over $100 a barrel at the time (2008), oil company stocks were already way up. Buffett lost roughly $2 billion as he bought the shares for $7 billion despite only being worth $4.4 billion.
Buffett put this poor investment down to getting swept up in the excitement surrounding oil prices at the time. A more detached investor might have recognized that the price of crude oil has always exhibited tremendous volatility and that oil companies have long been subject to boom and bust cycles.
2. USAir
Back in 1989, airline stocks were gaining popularity and none more so than USAir. (The company changed its name to US Airways in the 1990s and later merged with Amercian Airlines.) Buffett bought into this airline, which had achieved tremendous revenue growth since its founding 50 years earlier.
Buffett purchased $358 million of USAir preferred stock with 9.25% dividend, mandatory redemption in 10 years, and right to convert into common at $60 a share. The investment quickly turned sour, as USAir didn't achieve enough revenue to pay the dividends due on his stock, and approached bankruptcy. Only down to a stroke of luck, Buffett was able to offload his shares at a small profit at a later date.
Buffett still regrets his first foray into the airline industry to this day. In a 2007 letter to shareholders, he stated that he bought the stock as a security, but would never do it again. The airline industry, in general, is fickle because of a lack of customer loyalty, massive competition, and customers' tendency to choose the cheapest option. As a whole, airline investments rarely produce positive returns for investors.
3. Dexter Shoe Co.
In 1993, Warren Buffett paid $433 million for the Maine-based apparel company Dexter Shoe. Instead of paying in cash, Buffett actually made the purchase using Berkshire Hathaway Class A stock. Berkshire stock is worth eight times as much today.
Dexter ended shoe production in the United States and Puerto Rico in 2001, and Berkshire folded what was left into its H.H. Brown Shoe Group unit. In a 2008 open letter to his shareholders, Buffett declared: "To date, Dexter is the worst deal that I've made."
The main reason this is one of Buffett's costliest mistakes is the fact that by giving away $433 million in Berkshire shares, he had essentially cost the shareholders a potential $3.5 billion (what those shares would be worth now). In his own words: "I gave away 1.6% of a wonderful business -- one now valued at $220 billion -- to buy a worthless business."
Image source: MyWallSt.
Get your shortcut to 25 years of investing experience in just one day at InPerson. Click here to find out more.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Berkshire Hathaway. Read the full disclosure policy here.
10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
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The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Buffett purchased $358 million of USAir preferred stock with 9.25% dividend, mandatory redemption in 10 years, and right to convert into common at $60 a share. The investment quickly turned sour, as USAir didn't achieve enough revenue to pay the dividends due on his stock, and approached bankruptcy. Dexter ended shoe production in the United States and Puerto Rico in 2001, and Berkshire folded what was left into its H.H.
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The company was and still is very successful, but buying stocks in a great company does not make a great investment. Since crude oil prices were well over $100 a barrel at the time (2008), oil company stocks were already way up. The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares).
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ConocoPhillips Warren Buffett's decision to buy a large stake in multinational energy conglomerate ConocoPhillips (NYSE: COP) was not a mistake because he bought it, but rather that he bought the stock at the wrong price. See the 10 stocks {% render_component 'sa-returns-as-of' type='rg'%} The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares).
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The general idea was that Buffett was making a play for future energy prices, with many believing that oil prices would only increase over the long term. Berkshire stock is worth eight times as much today. See the 10 stocks {% render_component 'sa-returns-as-of' type='rg'%} The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares).
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6326.0
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2019-10-14 00:00:00 UTC
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4 Airline Stocks to Buy Despite Trump’s Tariffs
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https://www.nasdaq.com/articles/4-airline-stocks-to-buy-despite-trumps-tariffs-2019-10-14
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Airline stocks have been suffering over the past few years as bankruptcies, fluctuations in the price of oil and more recently, trade disputes and labor demands, have weighed on the sector. However, in the case of airline stocks it appears that history isn’t an indicator of the future, as the segment looks poised for a rebound.
Earlier this year the Boeing (NYSE:) 737 Max jet was grounded for safety reasons and although BA is working to get the plane back in the sky, there’s no way to predict how long that will take.
On top of that, the latest gives President Donald Trump’s administration clearance to impose a tariff on European goods that would make the price of Airbus (OTCMKTS:) aircraft 10% more expensive. That tariff is seen coming into effect Oct. 18 and consequently has weighed on the industry. Worries about rising costs are certainly founded, but the market’s knee-jerk reaction could be a great buying opportunity for value investors.
Here’s a look at the top four U.S. carriers and their ability to weather this storm.
Airline Stocks: Delta Air Lines (DAL)
Source: Markus Mainka / Shutterstock.com
At the end of December, Delta Air Lines (NYSE:) stock fell off a cliff on the tariff news. Delta stock is down 12% from its September highs despite what appeared to be a relatively solid third-quarter earnings report. Delta’s sales were up 6.5% and the firm’s margins expanded in the third quarter. Management said revenue is seen rising by more than 5% in Q4. Worries bout the sector overall kept investors focused on the fact that the earnings per share forecast was below expectations. And DAL stock suffered.
It’s true that Delta’s costs are going up. Aside from the impact of Trump’s tariffs, Delta is also dealing with pay increases and rising maintenance costs that will hurt the Q4 results. DAL stock is also likely to be one of the hardest hit by the Airbus tariff — the firm with Airbus at the end of August.
However there’s still a chance that the tariffs will be renegotiated, or at least delayed, in the days to come. , an economics professor at Niagara University said in an email interview that tariffs ultimately worsen conditions for both sides. He believes the trade tension with Europe is fundamentally different from what’s happening with China. This is in part because Europe is an ally, which could make it easier for the two sides to come to an agreement.
That outcome would be positive for DAL stock and may help facilitate a Q4 upside surprise. Plus, Delta is arguably one of the most financially sound on this list. And the firm’s 3.1% dividend yield makes waiting out some short-term pain much more palatable.
American Airlines (AAL)
Source: GagliardiPhotography / Shutterstock.com
American Airlines (NASDAQ:) has the second largest number of outstanding Airbus orders on the books with 114 awaiting delivery as of Aug. 31. On top of that, the firm was hit hard by the grounding of the Boeing 737 Max — around 150 flights per day were canceled as a result. That means AAL stock could make big moves if Boeing can get the plane cleared before the end of the year. So far, no concrete dates have been released by safety regulators, but it appears that most airlines are counting on the Max to return to flight by early 2020.
AAL has been beaten down over the past year. American Airlines stock is down more than 50% from its 2018 highs. That in itself has become somewhat of an argument to buy. JC O’Hara from MKM Partners told CNBC that American’s chart is so bad, it .
That’s the same sentiment that InvestorPlace’s Tim Biggam had earlier in October. He noted that AAL stock is in the industry right now. The firm is due to report its earnings on Oct. 24, after the Airbus tariffs come into effect. The report should provide some insight into how the firm will deal with the rising cost of its unfulfilled orders.
Southwest Airlines (LUV)
Source: Eliyahu Yosef Parypa / Shutterstock.com
Southwest Airlines (NYSE:) stock has been one of the best performers in the airline sector despite being impacted by the Boeing Max groundings. Southwest stock has been a top pick in the sector in part because it has remained relatively insulated from oil price swings. The company has an active fuel hedging program which protects Southwest from dramatic price changes and even earned LUV $3.2 billion between 2002 and 2008.
Southwest flies exclusively Boeing aircraft, so it won’t struggle if the tariffs are imposed as planned. In fact, LUV might actually benefit from the tariffs as the company has been forced to ground its 34 Max planes and hold off on the dozens more that have yet to be delivered. This has put competitors with fewer Max planes at an advantage. Southwest has planned its schedule through January without the Max planes. Any movement toward getting them in the sky would also be a boon for LUV stock.
United Airlines (UAL)
Source: travelview / Shutterstock.com
United Airlines (NASDAQ:) stock has just 45 unfulfilled Airbus orders on the books. The company operates a mixed fleet. Both tariffs and the grounded Max planes have hurt the company. The firm is due to report solid earnings on Oct.16. But investors are likely to remain cautious with all of the uncertainty surrounding the industry.
So far, UAL has recouped most of the losses it suffered when Trump’s Airbus tariffs were announced. That means although the stock is still weighed down by the Max groundings and overall uncertainty about airline stocks, it may not get the same bump that some of its other peers will if the U.S. and the European Union come to an agreement in the coming week.
Over the past year UAL has been growing its capacity and unit revenues consistently. And those trends appear set to continue. Bernstein analyst David Vernon believes UAL stock can once sentiment improves. In his view, the market has been “too negative” about the 737 issues. Vernon sees the firm making substantial gains as the dust settles.
As of this writing Laura Hoy did not hold a position in any of the aforementioned securities.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (AAL) Source: GagliardiPhotography / Shutterstock.com American Airlines (NASDAQ:) has the second largest number of outstanding Airbus orders on the books with 114 awaiting delivery as of Aug. 31. That means AAL stock could make big moves if Boeing can get the plane cleared before the end of the year. AAL has been beaten down over the past year.
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American Airlines (AAL) Source: GagliardiPhotography / Shutterstock.com American Airlines (NASDAQ:) has the second largest number of outstanding Airbus orders on the books with 114 awaiting delivery as of Aug. 31. That means AAL stock could make big moves if Boeing can get the plane cleared before the end of the year. AAL has been beaten down over the past year.
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American Airlines (AAL) Source: GagliardiPhotography / Shutterstock.com American Airlines (NASDAQ:) has the second largest number of outstanding Airbus orders on the books with 114 awaiting delivery as of Aug. 31. That means AAL stock could make big moves if Boeing can get the plane cleared before the end of the year. AAL has been beaten down over the past year.
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American Airlines (AAL) Source: GagliardiPhotography / Shutterstock.com American Airlines (NASDAQ:) has the second largest number of outstanding Airbus orders on the books with 114 awaiting delivery as of Aug. 31. That means AAL stock could make big moves if Boeing can get the plane cleared before the end of the year. AAL has been beaten down over the past year.
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6327.0
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2019-10-14 00:00:00 UTC
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3 Undervalued Stocks to Buy According to Goldman Sachs
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https://www.nasdaq.com/articles/3-undervalued-stocks-to-buy-according-to-goldman-sachs-2019-10-14
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Undervalued stocks are nothing new on Wall Street. And Goldman Sachs making a bullish call to defend a company’s shares is not exactly news either. But combine the two and add in price charts that confirm a bottom, and it’s clear that there’s plenty of potential in some underloved stocks. Specifically, I’m talking about the diversified and superior potential in American Airlines (NASDAQ:), Under Armour (NYSE:) and Regeneron Pharmaceuticals Inc (NASDAQ:).
There are bulls in investing and then there’s Goldman Sachs. One of the market’s most storied investment firms certainly maintains reasons for being generally optimistic in its market calls. That’s not to say Goldman isn’t making prop side bets or that it’s always bullish. But when it comes to paying customers, underwriting and the likes, a bull market is good for business.
Given how this well-oiled machine operates, a buy recommendation from Goldman isn’t exactly a rarity. Nevertheless, when the firm’s chief U.S. strategist acknowledges major market headwinds, but sees in several undervalued stocks — such as Netflix (NASDAQ:) and Freeport-McMoRan (NYSE:) — with 50% or more upside, it’s time to take notice.
But from there, we can whittle down that list of names to these three stocks to buy, since they have charts that can actually justify all the fuss. With that said, let’s dive a little deeper into what makes AAL, UAA and REGN stock worth a buy.
Undervalued Stocks to Buy: American Airlines (AAL)
As most investors may be aware, AAL stock has been left behind over the past few years while the broader market has continued to rally to all-time-highs. Shares are also down several percentage points since Goldman’s initial call.
But now AAL looks ready to take-off!
American Airlines’ weekly chart has confirmed a large pattern double bottom dating back to 2016 with a smaller variation of this formation. With shares of this undervalued stock also showing a supportive stochastics divergence during the development of the just-completed double bottom, it’s time to go long AAL stock with confidence.
AAL Stock Strategy: Goldman sees upside potential nearing 60% over the next 12 months for this undervalued stock. Use the failure of the paired double bottoms to contain losses if needed and take initial profits at $35 for a stronger risk-adjusted position.
Under Armour (UAA)
Under Armour is the next of our undervalued stocks to buy. Shares have been rallying for the last two years since initially falling out of favor with growth investors back in 2016, which was compounded by a series of missteps and earnings disappointments. But while UAA stock has gained ground since bottoming in 2017, as this past summer’s price action attests, it hasn’t been without incident.
The good news is right now the home field advantage on the price chart goes to bullish investors in shares of Under Armour.
UAA Stock Strategy: Goldman sees about 65% upside possible for UAA stock. I see diversification, a stop-loss slightly beneath the higher-low pattern low at $17.35 and a bonafide slam dunk if this undervalued stock can capture the firm’s price objective. However, I’d gladly take the opportunity to trim profits along the way and inside the last earnings gap near $25 a share.
Regeneron (REGN)
Not that I’ve saved the best for last, but this undervalued stock to buy does happen to have the largest potential for upside according to Goldman. The firm estimates Regeneron has room to run by roughly 79%. What shares also have going for them is a prolonged bearish market of nearly four years. This may have finally bottomed on the monthly price chart.
This view of REGN stock reveals shares have just confirmed a fresh lower low pivot within the biotech’s downtrend. With the September pivot just narrowly undercutting the last important low from 2018, a double bottom is in place on the monthly chart. Because the pattern also has the backing of a bullish oversold stochastics crossover, this undervalued stock is a name to buy today.
REGN Stock Strategy: Use an out-of-the-money bull call spread because of the risks associated with biotechs like REGN stock and its long history of price volatility.
I’d also suggest sticking with the chart for exiting and taking profits along the way. Specifically, use $270 for containing downside exposure and $400 – $425 for reducing upside risk.
Disclosure: Investment accounts under Christopher Tyler’s management currently own positions in Under Armour (UAA) securities and its derivatives but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter and StockTwits.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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With that said, let’s dive a little deeper into what makes AAL, UAA and REGN stock worth a buy. Undervalued Stocks to Buy: American Airlines (AAL) As most investors may be aware, AAL stock has been left behind over the past few years while the broader market has continued to rally to all-time-highs. But now AAL looks ready to take-off!
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Undervalued Stocks to Buy: American Airlines (AAL) As most investors may be aware, AAL stock has been left behind over the past few years while the broader market has continued to rally to all-time-highs. AAL Stock Strategy: Goldman sees upside potential nearing 60% over the next 12 months for this undervalued stock. With that said, let’s dive a little deeper into what makes AAL, UAA and REGN stock worth a buy.
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Undervalued Stocks to Buy: American Airlines (AAL) As most investors may be aware, AAL stock has been left behind over the past few years while the broader market has continued to rally to all-time-highs. With shares of this undervalued stock also showing a supportive stochastics divergence during the development of the just-completed double bottom, it’s time to go long AAL stock with confidence. AAL Stock Strategy: Goldman sees upside potential nearing 60% over the next 12 months for this undervalued stock.
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Undervalued Stocks to Buy: American Airlines (AAL) As most investors may be aware, AAL stock has been left behind over the past few years while the broader market has continued to rally to all-time-highs. AAL Stock Strategy: Goldman sees upside potential nearing 60% over the next 12 months for this undervalued stock. With that said, let’s dive a little deeper into what makes AAL, UAA and REGN stock worth a buy.
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6328.0
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2019-10-10 00:00:00 UTC
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American Airlines Extends Boeing 737 Max Cancellations Until Mid-January
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AAL
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https://www.nasdaq.com/articles/american-airlines-extends-boeing-737-max-cancellations-until-mid-january-2019-10-10
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(RTTNews) - American Airlines said its Boeing 737 Max cancellations will now extend through at least January 15.
The company now expects to fly about 70.1 billion available seat miles in the fourth quarter, as a result of the extension of the grounding.
American Airlines anticipates that the impending software updates to the Boeing 737 MAX will lead to recertification of the aircraft later this year and resumption of commercial service in January 2020.
The Airline also expects to slowly phase in the MAX for commercial service starting January 16 and will increase flying on the aircraft throughout the month and into February.
In March, the FAA ordered the grounding of all Boeing 737 Max jets after two deadly crashes that killed a total of 346 people.
American Airlines said today that it cancelled 9,475 flights in the third quarter and estimates that the cancellations in the third quarter negatively impacted pre-tax income by about $140 million.
The company expects its third quarter total revenue per available seat mile to be up about 1.5 to 2.5 percent year-over-year, despite the negative impact to revenue of Hurricane Dorian. The midpoint of this guidance is unchanged from the company's previous guidance of up approximately 1.0 to 3.0 percent.
The company expects its total pre-tax net special items in the third quarter will be about $280 million. The special items consist of a $200 million non-cash impairment charge related to the retirement of the company's E190 fleet, as well as fleet restructuring costs.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines anticipates that the impending software updates to the Boeing 737 MAX will lead to recertification of the aircraft later this year and resumption of commercial service in January 2020. The Airline also expects to slowly phase in the MAX for commercial service starting January 16 and will increase flying on the aircraft throughout the month and into February. In March, the FAA ordered the grounding of all Boeing 737 Max jets after two deadly crashes that killed a total of 346 people.
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(RTTNews) - American Airlines said its Boeing 737 Max cancellations will now extend through at least January 15. The company expects its third quarter total revenue per available seat mile to be up about 1.5 to 2.5 percent year-over-year, despite the negative impact to revenue of Hurricane Dorian. The company expects its total pre-tax net special items in the third quarter will be about $280 million.
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American Airlines said today that it cancelled 9,475 flights in the third quarter and estimates that the cancellations in the third quarter negatively impacted pre-tax income by about $140 million. The company expects its third quarter total revenue per available seat mile to be up about 1.5 to 2.5 percent year-over-year, despite the negative impact to revenue of Hurricane Dorian. The company expects its total pre-tax net special items in the third quarter will be about $280 million.
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(RTTNews) - American Airlines said its Boeing 737 Max cancellations will now extend through at least January 15. The company expects its third quarter total revenue per available seat mile to be up about 1.5 to 2.5 percent year-over-year, despite the negative impact to revenue of Hurricane Dorian. The company expects its total pre-tax net special items in the third quarter will be about $280 million.
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6329.0
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2019-10-09 00:00:00 UTC
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5 Top Stock Trades for Thursday: IRBT, AMRN, CGC
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https://www.nasdaq.com/articles/5-top-stock-trades-for-thursday%3A-irbt-amrn-cgc-2019-10-09
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After a volatile session on Tuesday, U.S. equities posted a robust rebound on Wednesday as hopes rise for a trade deal. Let’s look at a few top stock trades.
Top Stock Trades for Tomorrow No. 1: iRobot (IRBT)
iRobot (NASDAQ:) has been hammered from its highs this year, down more than 50%. Now, multi-year support could be giving way, as shares are getting clobbered Wednesday.
The $55 area was a significant mark in 2017 and 2018, but now, shares of IRBT are breaking below it. Above is a weekly chart, showing that IRBT has recovered from its earlier spill toward $50.
But it’s not out of the woods yet. A close below $55 this week would put the recent lows on watch, and below that, the selling could accelerate even more.
Best case for bulls? A sharp rebound by the end of the week. However, for it to garner any long-term momentum, IRBT needs to reclaim its 10-week moving average.
Top Stock Trades for Tomorrow No. 2: Amarin (AMRN)
Amarin (NASDAQ:) shares are teetering on $14, a vital level of support over the past few months.
The setup is simple from here. Below $14 and the $12.50 level is on the table. Above $14 and the 50-day moving average is on the table. Until AMRN reclaims the 50-day, bulls will have a hard time with this stock on the long side.
Why’s it a top stock trade? To highlight caution with the name.
Top Stock Trades for Tomorrow No. 3: Canopy Growth (CGC)
For being the leader of the cannabis movement, Canopy Growth (NYSE:) doesn’t look very healthy. At least not from a stock perspective.
At the moment, bulls need to see two things. First, CGC stock must stay above the current low at $20.52. Below that and sub-$20 prices are on the table. Second, they need Canopy to reclaim the 20-day and 50-day moving averages, as well as downtrend resistance (blue line).
If it can’t hurdle these resistance marks, they will continue to squeeze CGC lower and lower. Over $27 puts $29 on the table. Above that and we may see a gap-fill up toward $32.
Top Stock Trades for Tomorrow No. 4: AMC Entertainment (AMC)
The $12 mark held as firm resistance for AMC Entertainment (NYSE:) in August and September. With Wednesday’s decline amid a broad market rally, AMC is threatening to retest its July lows near $8.60.
If $8.60 holds as support, it could set up AMC as a range-bound trade between $8.50 and $12.
Content is king, huh? Apparently not for AMC. This name does not look pretty on the long side, although moving over $12 makes it much more attractive.
Top Stock Trades for Tomorrow No. 5: American Airlines (AAL)
American Airlines (NYSE:) hasn’t had an easy run over the past year. However, its stock is trying to turn things around.
Shares are over the significant level of $26, and this month’s low is slightly above last month’s low. That puts a higher low on the table for AAL, a bullish technical development.
Admittedly, the longer term trend is still bearish and AAL does not look all that healthy. But for those compelled on the long side, over $26 may be good for a decent bounce, at least into downtrend resistance and potentially the 50-week moving average. Below $26 and this month’s low is possible.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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5: American Airlines (AAL) American Airlines (NYSE:) hasn’t had an easy run over the past year. That puts a higher low on the table for AAL, a bullish technical development. Admittedly, the longer term trend is still bearish and AAL does not look all that healthy.
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5: American Airlines (AAL) American Airlines (NYSE:) hasn’t had an easy run over the past year. That puts a higher low on the table for AAL, a bullish technical development. Admittedly, the longer term trend is still bearish and AAL does not look all that healthy.
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Top Stock Trades for Tomorrow No. 5: American Airlines (AAL) American Airlines (NYSE:) hasn’t had an easy run over the past year. That puts a higher low on the table for AAL, a bullish technical development.
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5: American Airlines (AAL) American Airlines (NYSE:) hasn’t had an easy run over the past year. That puts a higher low on the table for AAL, a bullish technical development. Admittedly, the longer term trend is still bearish and AAL does not look all that healthy.
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6330.0
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2019-10-09 00:00:00 UTC
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Notable Wednesday Option Activity: AMG, AAL, ISRG
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https://www.nasdaq.com/articles/notable-wednesday-option-activity%3A-amg-aal-isrg-2019-10-09
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Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in Affiliated Managers Group Inc. (Symbol: AMG), where a total volume of 2,928 contracts has been traded thus far today, a contract volume which is representative of approximately 292,800 underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 57.6% of AMG's average daily trading volume over the past month, of 508,255 shares. Especially high volume was seen for the $70 strike put option expiring November 15, 2019, with 1,265 contracts trading so far today, representing approximately 126,500 underlying shares of AMG. Below is a chart showing AMG's trailing twelve month trading history, with the $70 strike highlighted in orange:
American Airlines Group Inc (Symbol: AAL) options are showing a volume of 43,491 contracts thus far today. That number of contracts represents approximately 4.3 million underlying shares, working out to a sizeable 56.9% of AAL's average daily trading volume over the past month, of 7.6 million shares. Particularly high volume was seen for the $26 strike call option expiring November 15, 2019, with 5,131 contracts trading so far today, representing approximately 513,100 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $26 strike highlighted in orange:
And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 3,397 contracts, representing approximately 339,700 underlying shares or approximately 56.6% of ISRG's average daily trading volume over the past month, of 600,605 shares. Especially high volume was seen for the $440 strike put option expiring October 18, 2019, with 315 contracts trading so far today, representing approximately 31,500 underlying shares of ISRG. Below is a chart showing ISRG's trailing twelve month trading history, with the $440 strike highlighted in orange:
For the various different available expirations for AMG options, AAL options, or ISRG options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $26 strike call option expiring November 15, 2019, with 5,131 contracts trading so far today, representing approximately 513,100 underlying shares of AAL. Below is a chart showing AMG's trailing twelve month trading history, with the $70 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 43,491 contracts thus far today. That number of contracts represents approximately 4.3 million underlying shares, working out to a sizeable 56.9% of AAL's average daily trading volume over the past month, of 7.6 million shares.
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Below is a chart showing AMG's trailing twelve month trading history, with the $70 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 43,491 contracts thus far today. Below is a chart showing AAL's trailing twelve month trading history, with the $26 strike highlighted in orange: And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 3,397 contracts, representing approximately 339,700 underlying shares or approximately 56.6% of ISRG's average daily trading volume over the past month, of 600,605 shares. That number of contracts represents approximately 4.3 million underlying shares, working out to a sizeable 56.9% of AAL's average daily trading volume over the past month, of 7.6 million shares.
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Below is a chart showing AAL's trailing twelve month trading history, with the $26 strike highlighted in orange: And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 3,397 contracts, representing approximately 339,700 underlying shares or approximately 56.6% of ISRG's average daily trading volume over the past month, of 600,605 shares. Below is a chart showing AMG's trailing twelve month trading history, with the $70 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 43,491 contracts thus far today. That number of contracts represents approximately 4.3 million underlying shares, working out to a sizeable 56.9% of AAL's average daily trading volume over the past month, of 7.6 million shares.
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Particularly high volume was seen for the $26 strike call option expiring November 15, 2019, with 5,131 contracts trading so far today, representing approximately 513,100 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $26 strike highlighted in orange: And Intuitive Surgical Inc (Symbol: ISRG) saw options trading volume of 3,397 contracts, representing approximately 339,700 underlying shares or approximately 56.6% of ISRG's average daily trading volume over the past month, of 600,605 shares. Below is a chart showing AMG's trailing twelve month trading history, with the $70 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 43,491 contracts thus far today.
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6331.0
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2019-10-09 00:00:00 UTC
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Stock Market News: American Airlines Pushes 737 MAX to 2020; Pot Financing Snags Hit Green Organic Dutchman
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AAL
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https://www.nasdaq.com/articles/stock-market-news%3A-american-airlines-pushes-737-max-to-2020-pot-financing-snags-hit-green
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Major benchmarks opened with solid gains on Wednesday morning, bouncing back from losses in Tuesday's session. Although there's still considerable uncertainty in trade negotiations between the U.S. and China, Chinese officials seemed to acknowledge that there might be a way to reach partial resolution of the disputes between the two nations. That was good news, coming as it did after a White House move expanded the list of prohibited Chinese companies with which their U.S. counterparts can't do business. By 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 149 points to 26,313. The S&P 500 (SNPINDEX: ^GSPC) rose 21 points to 2,915, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) gained 61 points to 7,885.
Once again, the 737 MAX aircraft was in the news, this time as American Airlines Group (NASDAQ: AAL) modified its schedules to account for the continued grounding of the plane. Meanwhile, Green Organic Dutchman (OTC: TGODF) saw a big decline after it gave its latest update on its prospects for getting financing.
American Airlines gives up on the 737 MAX for 2019
Shares of American Airlines Group were higher by nearly 3% after the airline giant decided to pull more of its scheduled flights with 737 MAX aircraft. The company had previously hoped that the MAX would be available as soon as early December, but recent events prompted American to extend its cancellations through Jan. 15.
Image source: American Airlines Group.
The impact on passengers won't be as big as that might imply, though. American is automatically switching the service on scheduled flights to 737-800 aircraft for all flights through Jan. 6 and for most flights after that. Even so, the disruptions are troubling, especially as the airline industry moves into the key holiday season.
Financially, American is feeling the pinch from the cancellations. The airline said that the MAX grounding cost it about $140 million in pre-tax income in the third quarter.
Even once the MAX comes back online, investors shouldn't expect American to get full capacity from the model immediately. In its release, the company said it intends to "slowly phase in the MAX for commercial service" with increasing use through the rest of January and February. That means investors will have to plan for ongoing impacts not just in the fourth quarter but in the first quarter of 2020 as well.
Organic Green Dutchman needs more green
Shares of Organic Green Dutchman didn't fare as well, falling 14%. The Canadian cultivator of premium cannabis offered an update on credit financing that pointed to big challenges for it to overcome.
Green Organic Dutchman said that it had originally looked at traditional commercial bank loan facilities and equipment leasing arrangements as part of its construction efforts on facilities in Ontario and Quebec. However, the marijuana company encountered a difficult market environment that made the terms on such financing unacceptable. As a result, the cannabis grower has gone back to the market seeking other financing sources.
Green Organic Dutchman's Ancaster facility in Ontario is nearing completion and has already gone through some key regulatory steps, including grow-room certification from Health Canada. The Valleyfield facility in Quebec has a lot further to go, but investors have high hopes for the project, as it will be the world's largest organic cannabis facility when complete.
Marijuana stocks generally have run into resistance lately as investors realize that even with lucrative markets, companies still have to execute well. Financing will be a key ingredient of future growth, and if money dries up for the entire industry, it could prove problematic not just for Organic Green Dutchman but for other well-known players as well.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Once again, the 737 MAX aircraft was in the news, this time as American Airlines Group (NASDAQ: AAL) modified its schedules to account for the continued grounding of the plane. Green Organic Dutchman's Ancaster facility in Ontario is nearing completion and has already gone through some key regulatory steps, including grow-room certification from Health Canada. Financing will be a key ingredient of future growth, and if money dries up for the entire industry, it could prove problematic not just for Organic Green Dutchman but for other well-known players as well.
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Once again, the 737 MAX aircraft was in the news, this time as American Airlines Group (NASDAQ: AAL) modified its schedules to account for the continued grounding of the plane. Image source: American Airlines Group. Even once the MAX comes back online, investors shouldn't expect American to get full capacity from the model immediately.
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Once again, the 737 MAX aircraft was in the news, this time as American Airlines Group (NASDAQ: AAL) modified its schedules to account for the continued grounding of the plane. American Airlines gives up on the 737 MAX for 2019 Shares of American Airlines Group were higher by nearly 3% after the airline giant decided to pull more of its scheduled flights with 737 MAX aircraft. Organic Green Dutchman needs more green Shares of Organic Green Dutchman didn't fare as well, falling 14%.
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Once again, the 737 MAX aircraft was in the news, this time as American Airlines Group (NASDAQ: AAL) modified its schedules to account for the continued grounding of the plane. American Airlines gives up on the 737 MAX for 2019 Shares of American Airlines Group were higher by nearly 3% after the airline giant decided to pull more of its scheduled flights with 737 MAX aircraft. Green Organic Dutchman's Ancaster facility in Ontario is nearing completion and has already gone through some key regulatory steps, including grow-room certification from Health Canada.
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6332.0
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2019-10-09 00:00:00 UTC
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American Airlines Stock Is Finally Ready to Take Off
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AAL
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https://www.nasdaq.com/articles/american-airlines-stock-is-finally-ready-to-take-off-2019-10-09
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nan
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nan
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American Airlines (NASDAQ:) has certainly encountered some turbulence lately. AAL stock had dropped over 30% from the July 25 highs near $35 before finally finding some footing. Higher fuel costs, a slowing economy and the ongoing Boeing 737 MAX saga all weighed heavily on American Airlines stock. The selling has gotten overdone, however. Look for an undervalued and oversold AAL to propel higher and begin to ascend.
Source: GagliardiPhotography / Shutterstock.com
AAL undoubtedly took a hit with the . Nearly 150 flights a day have been cancelled. The company expects that the 737 MAX airplane will be recertified this year. This should remove a big overhang in the stock price and be a catalyst for a rally. The recent drop in oil should also be beneficial as well.
The fundamentals are looking comparatively attractive at current levels. The trailing price-to-earnings ratio is only 7.8, well below the five-year average of 9.1. It is also at a large discount to the industry average of 10.8. American Airlines’ P/E is at a massive discount to the S&P 500 multiple of over 20. Price/sales stands at just 0.3 while price/cash flow is under 4. All of these metrics are nearing ten-year lows. AAL stock is decidedly cheap on both an actual and comparative basis.
AAL Stock Technical Chart
American Airlines stock is also attractive on a technical basis. The five-day relative strength index reached deeply oversold readings below 20 before strengthening. Moving average convergence/divergence reached a recent low then turned higher. Bollinger Band Percent B went negative but is now back in positive territory. There is solid horizontal support at the $25 level. AAL stock is trading at a discount to the 20-day moving average which has resulted in a rally back to that average in the past.
The prior five instances when these metrics aligned in a similar fashion marked a significant low in American Airlines stock. I expect that this time will be no different — and AAL will continue to head higher over the coming weeks.
AAL options have seen some unusual options activity over the past few trading sessions. Nearly 15,000 contracts of the Nov $25 calls have traded over the past three days versus just 1,653 open interest. These 15,000 contracts potentially represent a commitment of 1.5 million shares of American Airlines stock. The cost of the trade equates to a roughly $3 million outlay to purchase these options. Some big-time player is likely positioning for a big time pop in AAL stock.
How to Trade American Airlines
Stock traders and income investors should consider adding American Airlines to the portfolio on any weakness. The dividend yield is now at 1.52%, only slightly below the 10-year Treasury yield of 1.54%. The payout ratio is only 9%, meaning the dividend is very safe. Selling a Jan $28 covered call for $1.40 would boost the potential return by 5.3% (20.7% annualized) while still allowing for some upside appreciation.
The unusual call buying has driven up implied volatility, making option prices comparatively more expensive. This favors including some option selling when constructing trades. Option players who want to follow along with the call buying may want to consider going long the Nov $25/$27 call spread for $1.10. Maximum risk on the trade is $110 per spread. Maximum gain is $90 per spread if AAL stock closes above $27 at November expiration. Potential return on risk is 81%.
Earnings are due Oct. 24 with expectations for $1.33 in earnings per share on roughly $12 billion in revenue. An initial upside price target is a move back towards the recent highs at the $30 area. A meaningful break of support at $25 would be a viable stop out level.
Tim Biggam may hold some of the aforementioned securities in one or more of his newsletters. Anyone interested in finding out more about Tim and his strategies can go to .
More From InvestorPlace
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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AAL stock had dropped over 30% from the July 25 highs near $35 before finally finding some footing. Look for an undervalued and oversold AAL to propel higher and begin to ascend. Source: GagliardiPhotography / Shutterstock.com AAL undoubtedly took a hit with the .
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AAL Stock Technical Chart American Airlines stock is also attractive on a technical basis. AAL stock had dropped over 30% from the July 25 highs near $35 before finally finding some footing. Look for an undervalued and oversold AAL to propel higher and begin to ascend.
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AAL Stock Technical Chart American Airlines stock is also attractive on a technical basis. AAL stock is trading at a discount to the 20-day moving average which has resulted in a rally back to that average in the past. AAL stock had dropped over 30% from the July 25 highs near $35 before finally finding some footing.
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AAL stock had dropped over 30% from the July 25 highs near $35 before finally finding some footing. Look for an undervalued and oversold AAL to propel higher and begin to ascend. Source: GagliardiPhotography / Shutterstock.com AAL undoubtedly took a hit with the .
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6333.0
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2019-10-03 00:00:00 UTC
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Interesting AAL Put And Call Options For November 22nd
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AAL
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https://www.nasdaq.com/articles/interesting-aal-put-and-call-options-for-november-22nd-2019-10-03
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nan
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nan
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Investors in American Airlines Group Inc (Symbol: AAL) saw new options begin trading today, for the November 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new November 22nd contracts and identified one put and one call contract of particular interest.
The put contract at the $24.00 strike price has a current bid of $1.28. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $24.00, but will also collect the premium, putting the cost basis of the shares at $22.72 (before broker commissions). To an investor already interested in purchasing shares of AAL, that could represent an attractive alternative to paying $24.69/share today.
Because the $24.00 strike represents an approximate 3% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 60%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 5.33% return on the cash commitment, or 38.90% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for American Airlines Group Inc, and highlighting in green where the $24.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $25.00 strike price has a current bid of $1.53. If an investor was to purchase shares of AAL stock at the current price level of $24.69/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $25.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 7.45% if the stock gets called away at the November 22nd expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if AAL shares really soar, which is why looking at the trailing twelve month trading history for American Airlines Group Inc, as well as studying the business fundamentals becomes important. Below is a chart showing AAL's trailing twelve month trading history, with the $25.00 strike highlighted in red:
Considering the fact that the $25.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 50%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 6.20% boost of extra return to the investor, or 45.20% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 51%, while the implied volatility in the call contract example is 48%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $24.69) to be 42%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the Nasdaq 100 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Of course, a lot of upside could potentially be left on the table if AAL shares really soar, which is why looking at the trailing twelve month trading history for American Airlines Group Inc, as well as studying the business fundamentals becomes important. Below is a chart showing AAL's trailing twelve month trading history, with the $25.00 strike highlighted in red: Considering the fact that the $25.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options begin trading today, for the November 22nd expiration.
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Below is a chart showing AAL's trailing twelve month trading history, with the $25.00 strike highlighted in red: Considering the fact that the $25.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options begin trading today, for the November 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new November 22nd contracts and identified one put and one call contract of particular interest.
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Below is a chart showing AAL's trailing twelve month trading history, with the $25.00 strike highlighted in red: Considering the fact that the $25.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options begin trading today, for the November 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new November 22nd contracts and identified one put and one call contract of particular interest.
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At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new November 22nd contracts and identified one put and one call contract of particular interest. Below is a chart showing AAL's trailing twelve month trading history, with the $25.00 strike highlighted in red: Considering the fact that the $25.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options begin trading today, for the November 22nd expiration.
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6334.0
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2019-10-02 00:00:00 UTC
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Why Shares of American Airlines Group Are Descending Today
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AAL
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https://www.nasdaq.com/articles/why-shares-of-american-airlines-group-are-descending-today-2019-10-02
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nan
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nan
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What happened
Shares of American Airlines Group (NASDAQ: AAL) fell more than 6% on Wednesday after a rival warned that costs were coming in higher than expected. American is widely viewed as the most vulnerable of the major U.S. airlines, and investors have recently been heading for the emergency exits at the first sign of trouble.
So what
Before markets opened on Wednesday, American rival Delta Air Lines (NYSE: DAL) warned that third-quarter non-fuel costs would be up 2.5% year over year -- an increase from initial guidance for a 1% to 2% gain -- due to higher employee costs, weather, and record passenger volumes. Delta also said it now expects full-year 2019 non-fuel costs to be up 2%, versus a previous forecast for a rise of about 1%.
Image source: American Airlines Group.
Though Delta's news didn't directly impact American, the latter airline has given investors plenty of reasons to be concerned. American is carrying more debt than its peers, and faces labor unrest from its mechanics and other employees.
Airline Debt to Assets (Quarterly) data by YCharts.
It was also relying on Boeing's troubled 737 MAX for growth, and could face additional issues from that plane's grounding. Reuters reported on Tuesday that American's pilots would seek compensation for pay lost to canceled 737 flights.
The pilot request could either inflate costs at American, or put the airline at risk of inflaming tensions with another important labor group.
Now what
American does have disadvantages compared to some of its key rivals, and given the airline industry's history of destroying equity value during downturns, it's understandable that investors are getting nervous about the company. But American is far from a lost cause.
The airline is well-positioned to weather the ongoing U.S.-China trade dispute thanks to cutbacks announced last year, and it's in the early stages of implementing changes to its route network and pricing strategies designed to improve profitability. American is also forecasting that capital expenditures will come down in the next few years, which should free up cash to accelerate debt repayment.
Given the overall uncertainty of the economy and American's near-term disadvantages, now isn't an ideal time to climb on board, especially with better buys like Delta also trading down. But over the long run, American seems likely to navigate through these storm clouds.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of June 1, 2019
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 6% on Wednesday after a rival warned that costs were coming in higher than expected. Now what American does have disadvantages compared to some of its key rivals, and given the airline industry's history of destroying equity value during downturns, it's understandable that investors are getting nervous about the company. The airline is well-positioned to weather the ongoing U.S.-China trade dispute thanks to cutbacks announced last year, and it's in the early stages of implementing changes to its route network and pricing strategies designed to improve profitability.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 6% on Wednesday after a rival warned that costs were coming in higher than expected. So what Before markets opened on Wednesday, American rival Delta Air Lines (NYSE: DAL) warned that third-quarter non-fuel costs would be up 2.5% year over year -- an increase from initial guidance for a 1% to 2% gain -- due to higher employee costs, weather, and record passenger volumes. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them!
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 6% on Wednesday after a rival warned that costs were coming in higher than expected. So what Before markets opened on Wednesday, American rival Delta Air Lines (NYSE: DAL) warned that third-quarter non-fuel costs would be up 2.5% year over year -- an increase from initial guidance for a 1% to 2% gain -- due to higher employee costs, weather, and record passenger volumes. 10 stocks we like better than American Airlines Group When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 6% on Wednesday after a rival warned that costs were coming in higher than expected. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them!
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6335.0
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2019-10-01 00:00:00 UTC
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Notable Tuesday Option Activity: UNFI, MMM, AAL
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AAL
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https://www.nasdaq.com/articles/notable-tuesday-option-activity%3A-unfi-mmm-aal-2019-10-01
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nan
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nan
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Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in United Natural Foods Inc. (Symbol: UNFI), where a total of 6,167 contracts have traded so far, representing approximately 616,700 underlying shares. That amounts to about 49.1% of UNFI's average daily trading volume over the past month of 1.3 million shares. Especially high volume was seen for the $2.50 strike put option expiring December 20, 2019, with 1,400 contracts trading so far today, representing approximately 140,000 underlying shares of UNFI. Below is a chart showing UNFI's trailing twelve month trading history, with the $2.50 strike highlighted in orange:
3M Co (Symbol: MMM) saw options trading volume of 12,261 contracts, representing approximately 1.2 million underlying shares or approximately 47.8% of MMM's average daily trading volume over the past month, of 2.6 million shares. Especially high volume was seen for the $165 strike call option expiring October 04, 2019, with 1,130 contracts trading so far today, representing approximately 113,000 underlying shares of MMM. Below is a chart showing MMM's trailing twelve month trading history, with the $165 strike highlighted in orange:
And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 33,586 contracts, representing approximately 3.4 million underlying shares or approximately 47.4% of AAL's average daily trading volume over the past month, of 7.1 million shares. Particularly high volume was seen for the $30 strike call option expiring January 17, 2020, with 4,795 contracts trading so far today, representing approximately 479,500 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange:
For the various different available expirations for UNFI options, MMM options, or AAL options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $30 strike call option expiring January 17, 2020, with 4,795 contracts trading so far today, representing approximately 479,500 underlying shares of AAL. Below is a chart showing MMM's trailing twelve month trading history, with the $165 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 33,586 contracts, representing approximately 3.4 million underlying shares or approximately 47.4% of AAL's average daily trading volume over the past month, of 7.1 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange: For the various different available expirations for UNFI options, MMM options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing MMM's trailing twelve month trading history, with the $165 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 33,586 contracts, representing approximately 3.4 million underlying shares or approximately 47.4% of AAL's average daily trading volume over the past month, of 7.1 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange: For the various different available expirations for UNFI options, MMM options, or AAL options, visit StockOptionsChannel.com. Particularly high volume was seen for the $30 strike call option expiring January 17, 2020, with 4,795 contracts trading so far today, representing approximately 479,500 underlying shares of AAL.
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Below is a chart showing MMM's trailing twelve month trading history, with the $165 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 33,586 contracts, representing approximately 3.4 million underlying shares or approximately 47.4% of AAL's average daily trading volume over the past month, of 7.1 million shares. Particularly high volume was seen for the $30 strike call option expiring January 17, 2020, with 4,795 contracts trading so far today, representing approximately 479,500 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange: For the various different available expirations for UNFI options, MMM options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing MMM's trailing twelve month trading history, with the $165 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 33,586 contracts, representing approximately 3.4 million underlying shares or approximately 47.4% of AAL's average daily trading volume over the past month, of 7.1 million shares. Particularly high volume was seen for the $30 strike call option expiring January 17, 2020, with 4,795 contracts trading so far today, representing approximately 479,500 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange: For the various different available expirations for UNFI options, MMM options, or AAL options, visit StockOptionsChannel.com.
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6336.0
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2019-09-30 00:00:00 UTC
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Delta Bulks Up in South America With $1.9 Billion LATAM Investment
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AAL
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https://www.nasdaq.com/articles/delta-bulks-up-in-south-america-with-%241.9-billion-latam-investment-2019-09-30
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nan
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nan
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Just a few months ago, LATAM Airlines (NYSE: LTM) and American Airlines (NASDAQ: AAL) seemed to be on track to finalize a joint venture agreement covering travel between the U.S. and South America by the end of 2019. But in late May, Chile's Supreme Court blocked the two carriers from cooperating in Chile, citing the dominant market position they would have.
Initially, LATAM and American said they would proceed with their joint venture plans for the rest of South America, leaving Chile out. (LATAM is also the biggest airline in Brazil and has smaller subsidiaries in several other countries.)
However, Delta Air Lines (NYSE: DAL) saw this setback for the American Airlines-LATAM joint venture as a can't-miss opportunity. Last Thursday, Delta announced that it would buy a 20% stake in LATAM for $1.9 billion as a prelude to forming a full joint venture with South America's largest airline. This move will further entrench Delta's position as the most profitable of the three U.S. legacy carriers.
Delta will take a 20% stake in LATAM Airlines and the two carriers plan to form a joint venture. Image source: Delta Air Lines.
A comprehensive agreement
Under the deal announced last week, Delta Air Lines and LATAM Airlines will form a comprehensive strategic partnership. Later this year, they will begin codesharing, allowing customers to make seamless connections between the two airlines. Delta and LATAM will also apply for antitrust immunity so they can form a joint venture. That would allow them to coordinate schedules and pricing to maximize the profitability of existing routes and make new routes viable. The two carriers would share the revenue and costs from the joint venture, encouraging close cooperation.
Whereas American Airlines and LATAM are the top two airlines for flights between the U.S. and Latin America -- which ultimately caused their joint venture plan to be blocked in Chile -- Delta is currently the No. 4 airline between the U.S. and South America. As a result, the chance of a regulatory challenge is much lower. Delta's management believes it will take 12 to 24 months to receive regulatory approval and implement the joint venture.
The agreement also calls for Delta to buy four Airbus A350s from LATAM and take over 10 of the latter's A350 orders. This will help LATAM rationalize its fleet and reduce future capex. Delta will receive these 14 widebodies between late 2020 and 2025.
Delta Air Lines will take over 10 A350 orders from LATAM. Image source: Airbus.
Finally, Delta will solidify the partnership by spending $1.9 billion to buy 20% of LATAM through a public tender offer at $16 a share, a huge premium to the recent stock price. This will entitle it to representation on LATAM's board. Delta also expects to invest about $350 million to ease LATAM's transition away from the oneworld alliance (anchored by the likes of American Airlines, British Airways, Cathay Pacific, Qantas, and Japan Airlines). LATAM does not plan to join Delta's SkyTeam alliance, though. Going forward, it will be an unaligned carrier.
What this means for Delta
Delta Air Lines' management thinks that partnering with LATAM will be worth every penny it is spending. The carrier already has a leading position in the transatlantic market, thanks to joint venture arrangements with Air France-KLM and Virgin Atlantic. It is a strong No. 2 across the Pacific, helped by joint ventures with Korean Air and Virgin Australia and a partnership with China Eastern Airlines. By contrast, it has a comparatively weak market position in South America today.
Last year, Latin America accounted for just a quarter of Delta's international revenue. Within the region, Delta's business is heavily weighted toward flights to Mexico (where it has a joint venture with Aeromexico) and the Caribbean. Between the U.S. and South America, Delta trails American Airlines, LATAM, and United Airlines in market share.
By forming a joint venture with the region's largest airline, Delta thinks it can grow its top line in Latin America by $1 billion over the next five years. Additionally, because LATAM will be able to provide connecting traffic in key markets like Sao Paulo and Santiago, Delta expects its margins in the region to go from below average to above average.
Delta's rivals are falling further behind
American Airlines tried to put on a brave face about the Delta-LATAM announcement. It stated that its current partnership with LATAM provides less than $20 million of incremental revenue annually and that there would have been limited upside from forming a joint venture that excluded Chile.
However, this understates the likely impact of LATAM's decision to partner with Delta. Latin America is the one region of the world where American Airlines is unquestionably stronger than Delta today. Once the latter has access to LATAM's full network, that will no longer be the case. As a result, Delta Air Lines will have an even more compelling case to make to businesses and frequent flyers to switch their loyalty to Delta.
For the same reason, the planned Delta-LATAM joint venture could also hurt United, which would fall back to last place among the three U.S. legacy carriers in terms of service to Latin America. Thus, while Delta Air Lines is paying a high price to pry LATAM away from American Airlines and the oneworld alliance, the long-term gains for Delta could be substantial.
10 stocks we like better than Delta Air Lines
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Delta Air Lines wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Just a few months ago, LATAM Airlines (NYSE: LTM) and American Airlines (NASDAQ: AAL) seemed to be on track to finalize a joint venture agreement covering travel between the U.S. and South America by the end of 2019. Last Thursday, Delta announced that it would buy a 20% stake in LATAM for $1.9 billion as a prelude to forming a full joint venture with South America's largest airline. Finally, Delta will solidify the partnership by spending $1.9 billion to buy 20% of LATAM through a public tender offer at $16 a share, a huge premium to the recent stock price.
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Just a few months ago, LATAM Airlines (NYSE: LTM) and American Airlines (NASDAQ: AAL) seemed to be on track to finalize a joint venture agreement covering travel between the U.S. and South America by the end of 2019. Last Thursday, Delta announced that it would buy a 20% stake in LATAM for $1.9 billion as a prelude to forming a full joint venture with South America's largest airline. What this means for Delta Delta Air Lines' management thinks that partnering with LATAM will be worth every penny it is spending.
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Just a few months ago, LATAM Airlines (NYSE: LTM) and American Airlines (NASDAQ: AAL) seemed to be on track to finalize a joint venture agreement covering travel between the U.S. and South America by the end of 2019. Whereas American Airlines and LATAM are the top two airlines for flights between the U.S. and Latin America -- which ultimately caused their joint venture plan to be blocked in Chile -- Delta is currently the No. Between the U.S. and South America, Delta trails American Airlines, LATAM, and United Airlines in market share.
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Just a few months ago, LATAM Airlines (NYSE: LTM) and American Airlines (NASDAQ: AAL) seemed to be on track to finalize a joint venture agreement covering travel between the U.S. and South America by the end of 2019. Last Thursday, Delta announced that it would buy a 20% stake in LATAM for $1.9 billion as a prelude to forming a full joint venture with South America's largest airline. Delta will take a 20% stake in LATAM Airlines and the two carriers plan to form a joint venture.
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6337.0
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2019-09-24 00:00:00 UTC
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Noteworthy Tuesday Option Activity: ADBE, YUM, AAL
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AAL
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https://www.nasdaq.com/articles/noteworthy-tuesday-option-activity%3A-adbe-yum-aal-2019-09-24
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nan
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nan
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Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in Adobe Inc (Symbol: ADBE), where a total volume of 15,614 contracts has been traded thus far today, a contract volume which is representative of approximately 1.6 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 53.3% of ADBE's average daily trading volume over the past month, of 2.9 million shares. Particularly high volume was seen for the $270 strike put option expiring October 04, 2019, with 587 contracts trading so far today, representing approximately 58,700 underlying shares of ADBE. Below is a chart showing ADBE's trailing twelve month trading history, with the $270 strike highlighted in orange:
Yum! Brands Inc (Symbol: YUM) saw options trading volume of 8,477 contracts, representing approximately 847,700 underlying shares or approximately 51.9% of YUM's average daily trading volume over the past month, of 1.6 million shares. Especially high volume was seen for the $110 strike put option expiring November 15, 2019, with 3,492 contracts trading so far today, representing approximately 349,200 underlying shares of YUM. Below is a chart showing YUM's trailing twelve month trading history, with the $110 strike highlighted in orange:
And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 35,232 contracts, representing approximately 3.5 million underlying shares or approximately 46.9% of AAL's average daily trading volume over the past month, of 7.5 million shares. Particularly high volume was seen for the $34 strike call option expiring October 25, 2019, with 5,049 contracts trading so far today, representing approximately 504,900 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange:
For the various different available expirations for ADBE options, YUM options, or AAL options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $34 strike call option expiring October 25, 2019, with 5,049 contracts trading so far today, representing approximately 504,900 underlying shares of AAL. Below is a chart showing YUM's trailing twelve month trading history, with the $110 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 35,232 contracts, representing approximately 3.5 million underlying shares or approximately 46.9% of AAL's average daily trading volume over the past month, of 7.5 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: For the various different available expirations for ADBE options, YUM options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing YUM's trailing twelve month trading history, with the $110 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 35,232 contracts, representing approximately 3.5 million underlying shares or approximately 46.9% of AAL's average daily trading volume over the past month, of 7.5 million shares. Particularly high volume was seen for the $34 strike call option expiring October 25, 2019, with 5,049 contracts trading so far today, representing approximately 504,900 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: For the various different available expirations for ADBE options, YUM options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing YUM's trailing twelve month trading history, with the $110 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 35,232 contracts, representing approximately 3.5 million underlying shares or approximately 46.9% of AAL's average daily trading volume over the past month, of 7.5 million shares. Particularly high volume was seen for the $34 strike call option expiring October 25, 2019, with 5,049 contracts trading so far today, representing approximately 504,900 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: For the various different available expirations for ADBE options, YUM options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing YUM's trailing twelve month trading history, with the $110 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 35,232 contracts, representing approximately 3.5 million underlying shares or approximately 46.9% of AAL's average daily trading volume over the past month, of 7.5 million shares. Particularly high volume was seen for the $34 strike call option expiring October 25, 2019, with 5,049 contracts trading so far today, representing approximately 504,900 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: For the various different available expirations for ADBE options, YUM options, or AAL options, visit StockOptionsChannel.com.
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6338.0
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2019-09-24 00:00:00 UTC
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Did Spirit Airlines and American Airlines Deserve Monday's Analyst Downgrades?
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AAL
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https://www.nasdaq.com/articles/did-spirit-airlines-and-american-airlines-deserve-mondays-analyst-downgrades-2019-09-24
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nan
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nan
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Shares of Spirit Airlines (NYSE: SAVE) and American Airlines (NASDAQ: AAL) moved lower on Monday after getting negative reviews from Wall Street analysts. Andrew Didora of Bank of America downgraded shares of both airlines due to his projection that industry unit revenue trends are poised to deteriorate. To add insult to injury, Spirit Airlines stock was also downgraded by analyst Jack Atkins of Stephens.
Spirit Airlines and American Airlines have certainly faced plenty of setbacks this year. And while American Airlines isn't doomed, it's reasonable for analysts to take a cautious attitude toward the company. By contrast, Spirit Airlines' troubles are not as bad as they seem.
Spirit Airlines is not in as much trouble as it may appear. Image source: Spirit Airlines.
Analysts turn negative on two airlines
In his recent report, Bank of America's Didora noted that the return of the Boeing 737 MAX -- which will likely occur in late 2019 or early 2020 -- will drive a sharp uptick in U.S. airline industry capacity growth in 2020. He projects that domestic capacity will increase nearly 6% next year. Meanwhile, demand growth appears to be slowing. As a result, airlines could face significant unit revenue pressure as industry capacity growth accelerates.
In this context, Didora is advising investors to avoid shares of airlines that face cost pressures. He observed that American Airlines has numerous labor contracts up for renewal soon, which could lead to big wage increases or increased labor strife. He also pointed to Spirit Airlines CFO Scott Haralson's comment in late July that nonfuel unit costs would likely be flat or up slightly in 2020, despite very easy year-over-year comparisons.
Both American and Spirit have significant route network overlap with top 737 MAX customer Southwest Airlines. As a result, Didora believes they will face a double whammy of higher unit costs and weak unit revenue next year. That's why he downgraded American Airlines stock to neutral, with a $31 price target, although that's still above the stock's Friday closing price of $27.99. Didora cut his rating on Spirit Airlines to underperform (the equivalent of sell) and reduced his price target to $39. The stock closed at $38.03 on Friday.
Analysts at Stephens were slightly more generous but agree that Spirit Airlines' business is facing significant near-term headwinds. They cut the stock's rating to equal-weight (the equivalent of hold) and slashed their price target to $45 from $55.
A mixed outlook at American Airlines
American Airlines has faced more than its share of difficulties this year. The grounding of the 737 MAX has hurt its bottom line by hundreds of millions of dollars. An alleged slowdown by mechanics frustrated by slow contract negotiations caused a spike in delays and flight cancellations, alienating customers.
2019 has been another disappointing year for American Airlines. Image source: American Airlines.
If the 737 MAX returns to service before year-end, as American's management expects, it would create a substantial unit cost tailwind in 2020. That said, depending on when the airline agrees on new contracts with its pilots, flight attendants, and mechanics, higher labor costs could more than offset the savings from a return to normal operations.
On the flip side, all of American Airlines' growth next year will come in Dallas and Charlotte, North Carolina. Those are its two largest hubs and two of its most profitable bases. Expanding these fortress hubs may enable American to capture more high-margin connecting traffic from small cities. That in turn could help the airline buck analysts' expectations and deliver solid unit revenue growth despite a tough competitive environment.
In short, American Airlines may be able to overcome the challenges it faces, but a neutral rating is reasonable in light of the risks -- particularly because the company has a heavy debt load.
Analysts are overreacting to Spirit Airlines' recent challenges
As for Spirit Airlines, it's harder to justify the analysts' concerns. Spirit stumbled badly this summer, scheduling too many flights, such that bad weather caused huge operational disruptions that were aggravating for customers and costly for the airline. As a result, whereas the company posted massive earnings growth in late 2018 and the first half of 2019, analysts expect sharp earnings declines in the back half of the year.
It's also true that Spirit Airlines expects nonfuel unit costs to be flat at best next year, while it could face meaningful capacity increases by Southwest in some of its markets. On the other hand, this cost forecast could be conservative -- Spirit has often been able to reduce its costs more than expected.
In any case, the carrier has plenty of tools at its disposal to boost unit revenue. Spirit's delayed project to install in-flight Wi-Fi should be finished (or very close) by the end of 2020. An updated loyalty program could also start to positively impact unit revenue as early as next year. More tangibly, after entering nine new cities last year, Spirit Airlines has started culling routes that didn't work. It ended its flights to Cap-Haitien, Haiti, in June. In November, the airline will exit three routes from Fort Lauderdale, Florida, that it launched last year. It will stop flying between Tampa, Florida, and Greensboro, North Carolina, at the same time.
These route network refinements should offset the potential competitive capacity increases in Spirit's markets. As a result, Spirit Airlines should be able to return to unit revenue growth and margin expansion next year. That makes shares of the fast-growing airline a screaming buy at just eight times earnings.
10 stocks we like better than Spirit Airlines
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Adam Levine-Weinberg owns shares of Spirit Airlines and is long January 2020 $20 calls on American Airlines Group and long January 2021 $40 calls on Southwest Airlines. The Motley Fool owns shares of and recommends Southwest Airlines and Spirit Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Shares of Spirit Airlines (NYSE: SAVE) and American Airlines (NASDAQ: AAL) moved lower on Monday after getting negative reviews from Wall Street analysts. He also pointed to Spirit Airlines CFO Scott Haralson's comment in late July that nonfuel unit costs would likely be flat or up slightly in 2020, despite very easy year-over-year comparisons. That said, depending on when the airline agrees on new contracts with its pilots, flight attendants, and mechanics, higher labor costs could more than offset the savings from a return to normal operations.
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Shares of Spirit Airlines (NYSE: SAVE) and American Airlines (NASDAQ: AAL) moved lower on Monday after getting negative reviews from Wall Street analysts. As a result, airlines could face significant unit revenue pressure as industry capacity growth accelerates. It's also true that Spirit Airlines expects nonfuel unit costs to be flat at best next year, while it could face meaningful capacity increases by Southwest in some of its markets.
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Shares of Spirit Airlines (NYSE: SAVE) and American Airlines (NASDAQ: AAL) moved lower on Monday after getting negative reviews from Wall Street analysts. Spirit Airlines and American Airlines have certainly faced plenty of setbacks this year. Analysts are overreacting to Spirit Airlines' recent challenges As for Spirit Airlines, it's harder to justify the analysts' concerns.
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Shares of Spirit Airlines (NYSE: SAVE) and American Airlines (NASDAQ: AAL) moved lower on Monday after getting negative reviews from Wall Street analysts. That's why he downgraded American Airlines stock to neutral, with a $31 price target, although that's still above the stock's Friday closing price of $27.99. It's also true that Spirit Airlines expects nonfuel unit costs to be flat at best next year, while it could face meaningful capacity increases by Southwest in some of its markets.
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6339.0
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2019-09-22 00:00:00 UTC
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How to Invest in Airline Stocks
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AAL
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https://www.nasdaq.com/articles/how-to-invest-in-airline-stocks-2019-09-22
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nan
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nan
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The U.S. airline industry has largely been a destroyer of capital in the years since the industry was deregulated in the late 1970s and companies were allowed to truly compete head-to-head for business. The federal rule changes created a boom/bust cycle of new competition squeezing profits when times were good and forcing bankruptcies and liquidations when the overall economy turned south. Storied companies like Eastern Airlines, TWA, Braniff, and PanAm disappeared from the skies during this era, costing airline stock investors billions of dollars in the process.
Fortunately, the shakeout from deregulation is now pretty much complete. A period of restructuring and consolidation in the early 2000s reduced the number of airlines competing and fortified the balance sheets of the survivors. Delta Air Lines bought Northwest, American Airlines Group merged with the combination of US Airways and America West, United Airlines Holdings combined with Continental, and Southwest Airlines bought AirTran.
The result is a domestic marketplace where four carriers control about 80% of the market, giving the companies greater wherewithal to make money in good times and weather downturns.
Image source: Getty Images.
Here's a good example of how much the airline industry has changed in the last decade: Warren Buffett, in his 2007 chairman's letter to Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) investors, said airline stocks were such a poor investment that, "if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down." Today, his well-respected holding company owns shares of the four largest U.S. airlines.
Consolidation has helped fuel profitability, but there are other factors as well. Armed with improved balance sheets, airlines have aggressively replaced their aging fleets with newer, more fuel-efficient aircraft, a trend that continues to this day. Many of those new planes have higher passenger capacities and are more fuel-efficient than the planes they are replacing, helping add to productivity and making each flight more profitable.
If airline companies are now good enough for Buffett, they might be worthy of a place in your stock portfolio. Let's take a look at the important things to know before investing in airline stocks. We'll also dive into a few attractive stock candidates that are good buys today.
What are some key airline industry metrics and terms to remember?
Airline pilots use a unique vocabulary to communicate with the control tower. Anyone who has tried to navigate an airline's financial statement knows a carrier's accounting department also uses its own industry-specific lingo. If you want to invest in airlines, there are some terms you need to know.
RASM: All flights are not equal to an airline's scheduling department. A transpacific voyage from Los Angeles to Sydney, Australia, for example, requires a far different revenue calculation than using the same plane to connect Las Vegas to Dallas. So, simply calculating plane capacity by the total number of daily flights or even just tallying the number of seats available for sale leaves out important financial considerations.
For this reason, airlines measure their passenger capacity using a metric called "available seat miles," which is the number of seats put on sale multiplied by the number of miles flown. So, a 1,000-mile flight operated with a plane that carries 200 passengers translates to 200,000 available seat miles.
RASM, or revenue per available seat mile, is measured by taking an airline's revenue in a particular period and dividing it by the number of available seat miles. Airlines will break it down further with passenger RASM, or PRASM, which takes into account only ticket sales and not cargo revenue.
For example, if Foolish Airlines flew 200 billion available seat miles in a year and generated total revenue of $30 billion in that period, its RASM would be $0.15. In 2018, according to the U.S. Department of Transportation, the industry averaged a PRASM of just under $0.12, with Delta being the top performer at nearly $0.13 PRASM.
CASM: Similarly, CASM, or cost per available seat mile, is a measure of how much it costs an airline to fly one seat one mile. Investors can use RASM and CASM together to get a gauge on how profitable an airline is relative to its peers and how efficient it is. If Foolish Airlines had total expenses of $24 billion in the year where it had its 200 billion available seat miles, its CASM would be $0.12.
Most airlines will include their RASM and CASM numbers in their financial statements. While RASM and CASM can be useful comparison tools, it is important to look beyond the raw numbers. An international airline with a fleet that includes many different aircraft types is likely to have a much higher CASM than a domestic discount carrier, for example. But if that international airline can generate a revenue premium from extra services that come with international flights, it could be a more enticing investment despite the higher costs.
Load factor: While most investors have plenty of antidotal stories about how a particular airline is doing based on individual experiences with crowded or overbooked flights, the load factor is a more precise measurement of how full a company's planes are. Airlines typically calculate load factor by looking at RASM as a percentage of available seat miles. That's a more precise measurement than just saying 60 of 79 seats were filled on a particular flight, and it provides more insight into an airline's ability to consistently fill its planes.
Load factor is measured as a percentage, and despite how it may feel when you are on a packed plane, the airlines do not fill all of their seats. But they are getting better at it. The average load factor for the U.S. industry in 2018 was 84%, up from 67% in 1995.
International alliances: Airlines competing for lucrative corporate contracts want to offer their business fliers access to the world, and they do so by teaming with international partners. The global airspace is divided into three large marketing alliances, with one full-service U.S. airline belonging to each of the three. Delta Air Lines is a part of Skyteam, American Airlines partners with Oneworld, and United Airlines is a member of the Star Alliance.
The three alliances all span the globe, although each does have strength and weaknesses in certain countries and regions based on having a domestic partner in that region. For example Star Alliance, which counts Germany's Lufthansa as a member, has direct access to more German cities than the others, though both Skyteam and Oneworld can fly passengers into key German markets from outside of Germany.
The alliances are all similar in size, carrying between 600 million and 700 million passengers per year.
Regional partners: The full-service airlines work with smaller carriers -- sometimes wholly owned subsidiaries and sometimes independents -- that fly smaller jets and turboprop planes primarily between smaller markets and various national hubs. The partners have separate labor deals and fleets of smaller aircraft that can better serve smaller markets where you can't justify the cost of sending a larger plane. Tickets on these partner flights are typically sold by the larger airline, though the portion of the trip operated by the partner will show as flown by partners like American Eagle, Delta Connection, or United Express. The larger airlines also handle the marketing and sometimes the airport logistics, while the regional partners handle the flying expenses for a pre-arranged fixed fee.
Although many of the regional airlines are now wholly owned subsidiaries or private, there are a few public companies in the sector. The largest is SkyWest, which flies for Delta, American, United, and Alaska. Mesa Air Group (NASDAQ: MESA) is also public.
Scope clauses: Airline route planners and schedulers are also bound by scope clauses in labor deals, which can limit the number and size of aircraft that can be flown by regional partners. Airline unions have included scope clauses in contracts to limit the amount of flying that can be outsourced to partners and protect their members' jobs.
The clauses are significant because airlines often complain that scope clauses can make them less competitive than rivals because they limit the number of smaller cities an airline can serve due to a lack of appropriately sized aircraft. They also cut into profitability by forcing airlines to fly larger jets into markets that can't support the added capacity.
International treaties: Finally, while it is not important for investors to memorize the Freedoms of the Air that govern international air service, it is good to know they exist. These are the international agreements that regulate an airline's ability to fly over or land in foreign countries, pick up customers in those countries, or travel between two international countries.
Most countries (including the United States) limit foreign ownership of domestic airlines. And in most parts of the world, foreign airlines are not allowed to operate domestic flights outside of their home countries. There are also typically regulations preventing airlines from operating between two foreign nations. European airlines, for example, are not able to compete with U.S. carriers by offering flights between two U.S. cities or between a U.S. city and a non-European city (like Chicago and Mexico City). These rules are also why Richard Branson, when founding Virgin America in the U.S., was forced to bring on outside U.S.-citizen investors to take a majority stake.
What are the largest U.S. airlines?
Airlines traditionally have fallen into one of four categories, and while the boundaries have blurred a bit in recent years, the designations still largely hold true.
Full-service airlines boast massive route networks and international partners designed to take you anywhere in the world and offer a range of cabin choices en route. Discounters provide fewer frills, and usually fewer destinations, but focus on lower costs. Regionals offer outsourced connections but rely on the full-service airlines for branding, marketing, and ticket sales. Contract carriers, which tend to be smaller and off the radar, fly mostly cargo and charter missions.
Here's a list of the largest U.S. airline companies, as ranked by their market capitalization, and where they fit in the industry spectrum.
Data source: Yahoo! Finance, author. Market cap is current as of Aug. 30, 2019.
What are some key trends in the airline industry?
Historically, the knocks against airlines as investments have centered on the high fixed costs and fluid demand. Airlines spend hundreds of millions of dollars on new aircraft, taking on considerable debt in the process, and then need to be able to sell tickets at a price that allows them to recoup the investment.
During recessions (when airlines have typically gotten into trouble), it has been difficult for the companies to sell enough tickets at a high enough fare to cover all of those expenses. Even in good times, competition has limited pricing power (the ability to raise prices without losing customers). Despite frequent flyer programs and extensive marketing campaigns, a seat on a plane from Cleveland to San Diego is similar no matter what color paint is on the outside of the plane. While consumers love frequent flyer miles, they usually gravitate toward the lowest fare.
Corporate consolidation was supposed to address the lack of pricing power, but the issue is still present for some airlines to this day. Adjusted for inflation, the average U.S. domestic fare in the first quarter of 2019 was down 15% compared to the first quarter of 2015, according to the Bureau of Transportation Statistics.
Airlines have, however, gotten better at managing expenses and generating revenue from non-ticket sources. Most large carriers now lease a portion of their fleets instead of buying them outright, allowing the airlines to shift some of the cost liabilities that come with new aircraft off of their balance sheet and giving them more flexibility to grow and shrink their fleets than they would if the planes were all fully owned.
Image source: Getty Images.
Airlines are also using more sophisticated ticket-selling software, called revenue management systems, to pinpoint demand on particular trips and squeeze extra revenue out of high-demand routes. The software has gotten better at guessing how price-sensitive a passenger is based on how far in advance they are booking travel, and has predictive abilities that can help the airline scheduling department match the right-sized plane to the route to minimize empty seats.
They are also charging for more of the perks that past generations of flyers got for free. Items that were once included in the ticket price -- checked bags, seat assignments, and even snacks and drinks -- now come at a cost, particularly for the lowest-priced tickets. Added frills like boarding early and internet access also often come at an additional cost.
Consumers often complain that the airlines are nickel-and-diming them by charging extra, but the flights are mostly full and increasingly there are few choices to avoid the fees. The airlines will argue that by making the base fare cheaper and then having customers pay for only the extras they want, the companies are giving the passenger more of a choice and preventing individuals from having to pay for frills they won't use.
No matter which side you take in the debate, the result is that airlines have been able to generate additional revenue while still engaging in fierce pricing competition and the companies are now less susceptible to failure in the event of an economic downturn.
What are some reasons to avoid investing in airline stocks?
Few would argue that the airline industry hasn't transformed itself and isn't much more resilient than it has ever been before. Management is confident, with American CEO Doug Parker famously saying in 2017, "I don't think we're ever going to lose money again," predicting profits in good times and in bad.
Of course, the U.S. economy has been high flying since the 2008-2009 Great Recession and these newly revitalized airlines haven't really been put to a test yet. There are some challenges that restructuring and consolidation have not been able to alleviate, and investors still need to be on guard for potential downturns.
Fuel costs: Airlines are massive consumers of fuel, and are vulnerable to oil prices. In 2018, the global airline industry spent nearly $180 billion on fuel, representing nearly one-fourth of total operating expenses, according to an industry trade group. The specific type of fuel airlines need generally makes up a small portion of a refinery's total output, and due to changing trends in energy consumption and environmental pressure, jet fuel can sometimes be scarce and expensive in certain regions of the U.S.
The situation was so dire in the U.S. Northeast in 2012 that Delta bought a refinery in Pennsylvania to try to ensure the supply to regional airports.
Employment costs: Labor is another huge risk factor to monitor with airlines. Pilots, flight attendants, and mechanics, among other groups, are unionized at most airlines. Labor accounts for upwards of one-third of total airline operating expenses, and union contracts make it difficult for management to trim the size of the workforce or reduce costs when times are bad.
The latest round of airline restructurings included more profit-sharing for workers, which has eased what in the past had often been an acrimonious management/labor relationship. But there are still flare-ups from time to time. There are also multiple unions representing pilots, mechanics, and other work groups at various airlines. Those unions, at times, will compete to establish footholds at additional airlines. That puts pressure on incumbent union leadership to get an industry-leading deal every time their contract is up. That, in turn, puts steady upward pressure on labor costs across the industry.
The last new contract cycle saw wage rates climb in the range of 30% for most groups across most airlines, according to Cowen & Co. research. But those boosts were, in part, playing catch-up to pre-bankruptcy and pre-recession levels for workers at some airlines. There are many contract renewals to be negotiated beginning in 2020, and while increases are likely, airline investors can hope that they won't match the last round of hikes. Regardless, expect labor costs will increase in the years to come.
Even without labor tensions, the industry is facing a shortage of pilots, in part because years of experience is required before entering a commercial cockpit coupled with the mandatory U.S. pilot retirement age of 65. Labor has significant leverage in disputes with management and needs to be watched closely by investors.
Debt: The airline business, by its nature, requires companies to take on a lot of debt. There are several fixed costs that go into running an airline, including expensive airplanes, employee salaries, fuel, and ground equipment, and the onus is on the airline to sell enough tickets to cover those expenses.
When airlines have failed in the past, it has usually been because of an unexpected slowdown in travel demand that leaves a company unable to generate enough revenue to pay its bills. It's been a while since we've seen this happen to a major carrier in the U.S., but high-profile examples like the grounding of Iceland's WOW Air in early 2019 are reminders it can still happen today.
As mentioned above, airline balance sheets are generally much healthier than in years past, reducing the risk, but investors still need to be aware of debt levels when picking between potential investments. Debt levels can change over time, based on a company's need to borrow to buy new planes or management's desire to pay down borrowings instead of funding buybacks and dividends.
The table below is a snapshot of debt levels as of September 2019, looking at both total debt and a ratio of debt to assets. At that point, American by far had the most debt among major airlines and the highest ratio of debt to assets. This isn't necessarily a reason to avoid American -- the company at the time was coming off a planned spending campaign and was in the early stages of implementing a plan designed to pay down the debt -- but it is a factor that investors should consider when analyzing the airline industry.
Airline debt measures data by YCharts.
Other concerns: Airlines, as major consumers of fuel, are sometimes the target of criticism over the industry's contribution to global warming. The companies have run various campaigns offering carbon offsets and, by and large, can deflect criticism because they are all culprits and there isn't a better way to travel long distances quickly. But over time environmental concerns, or airport congestion or other factors, could make alternates like rail more attractive for shorter trips.
There are also occasional equipment risks. American, United, and Southwest were all put at a competitive disadvantage in 2019 due to the grounding of Boeing's 737 MAX planes over concerns about safety. This required schedules to be juggled and growth plans to be curtailed. In years past, there have also been delays or complications when introducing other models or new engine types that at least temporarily caused an airline's growth to slow.
What are some indirect ways to invest in airline stocks?
If you would like to invest in airlines but don't want to pick out a particular stock, there are a number of industry exchange-traded funds, or ETFs, to consider. ETFs are baskets of different securities that are pooled together into a single entity, which then offers shares to investors that are traded on major stock exchanges. Each share of an ETF gives its owner a proportional stake in the total assets of the exchange-traded fund.
ETFs with exposure to airlines include the SPDR S&P Transportation ETF (NYSEMKT: XTN), which includes nearly a dozen airlines among its portfolio of 40-plus stocks that also includes ground transportation companies and other shippers. US Global Jets ETF (NYSEMKT: JETS) is more directly focused on airlines, along with airplane manufacturers, part suppliers, and other ancillary businesses like airport operators. JETS also has exposure to international airlines. Finally, the iShares Transportation Average ETF (NYSEMKT: IYT) tracks the Dow Jones Transportation Index, which includes airlines and other transport companies.
As mentioned above, another indirect way to invest in airlines, along with many other businesses, is to buy shares of Berkshire Hathaway. Delta and Southwest both rank among Berkshire's top 20 stock holdings, though the overall portfolio is more focused on financial and consumer goods companies.
What are some airline stocks to consider buying now?
Airline stock investors are well aware of the challenges currently facing the sector. The industry has been under more pressure in the summer of 2019 with news of a potential recession and the possibility of rising oil prices. Time will tell if Buffett and others are correct about airline stocks now being a solid investment option.
Either way, there are some strong airlines that investors can board and ride through the turbulence of the ups and downs of the business cycle.
Delta Air Lines: This airline has been at the forefront of most of the innovations of the past two decades. It was among the first to reorganize following the attacks of Sept. 11, 2001, and it kicked off the latest round of consolidation when it purchased Northwest Airlines in 2008.
In the years since, the airline has been at the leading edge of using software to transform fare pricing to better compete against discounters while still getting a premium from less cost-focused customers. It has also been investing capital to solidify its international alliances, and it owns large minority stakes (and board seats) in airlines based in the United Kingdom, Mexico, China, and Brazil.
Image source: Delta Air Lines.
Delta in recent years has been among the best financial performers among the airlines, consistently generating earnings results that match or beat expectations. It was the first of the restructured full-service airlines to introduce a dividend, and since 2016 has consistently offered the best yield among major airlines. It also consistently trades at a multiple to earnings below Southwest, and in line with its poorer-performing peers.
Alaska Air Group: Alaska Air for years was a quiet, niche airline focused on the Pacific Northwest. But it joined the consolidation frenzy in 2016 when it bought Virgin America. While still significantly smaller than the nation's big four airlines, Alaska has been attempting in the years since the deal to position itself as offering all of the frills and advantages of full-service airlines while limiting its route map to include only destinations where it either has a competitive advantage or that tend to have higher margins.
The integration of Virgin America hasn't gone as smoothly as hoped, but Alaska through it all has managed to retain the loyalty of its customers. The company believes it can consistently generate pre-tax margins of between 13% and 15%, nearly double what it generated following the merger, as it continues to reallocate Virgin's jets toward more-profitable routes and rolls out its version of a fare system to rival what Delta and some of the larger airlines are now working toward.
Image source: Alaska Air Group.
Alaska, in years past, was able to successfully walk the thin line of being as nimble as a discounter but offering a complete enough product and route network to engender loyalty among customers. As the integration moves toward completion, expect the airline to regain its former place in the industry, which has historically allowed it to generate outsize returns.
Spirit Airlines: This airline takes "no-frills" to the extreme, pioneering in the U.S. the "ultra-low-cost carrier" first made popular in Europe. Southwest Airlines decades ago made its mark by cherry-picking routes and simplifying the product that an airline offers to its passengers. Spirit has taken the model a step further, offering rock-bottom fares and then charging customers for perks like choosing a seat ahead of time, bringing carry-on luggage on board, and even snacks and drinks.
Image source: Spirit Airlines.
Spirit's philosophy has made it the target for a lot of customer complaints, but the model is still attractive enough for a subset of travelers who want affordable tickets and have no real need for add-ons. Spirit is regarded as a "spill" carrier, an industry term that implies it is only able to fill its jets when its competitors have sold out. But the airline's load factors have steadily improved as it has grown and now consistently stay north of 84% occupancy.
Because of the niche it fills in the industry, Spirit is often considered by investors to be among the most vulnerable to a downturn, but its flexible model belies those fears. This is not a blue chip investment choice and will likely be more volatile than other airline stocks, but Spirit is a fast-growing company with a lot of runway in front of it and should deliver for investors over the long haul.
Fly with confidence into this sector
The airline industry in the past has attracted a lot of critics, and justifiably so. It's hard to find an airline customer who doesn't have a horror story about a multihour flight delay or a vacation nearly ruined by a flight issue. But while delays are still common and legroom is now nearly nonexistent, the investment case for airline stocks has improved dramatically in recent years. Buffett today presumably is glad the Wright brothers succeeded at Kitty Hawk, and other investors should be as well.
It might prove to be overly optimistic to say there will be no airline troubles when the next recession eventually does occur. But there is strong evidence to suggest that the overall industry is healthy enough to survive a downturn. And with travel demand unlikely to evaporate, there is ample room to grow for the foreseeable future.
The airline business, almost uninvestable in for a generation, is now in play for a buy-and-hold investor willing to wade through the financial statements and find the best opportunities.
10 stocks we like better than Delta Air Lines
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Delta Air Lines wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Lou Whiteman owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Delta Air Lines, Southwest Airlines, and Spirit Airlines. The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool recommends Alaska Air Group, Hawaiian Holdings, and JetBlue Airways. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The software has gotten better at guessing how price-sensitive a passenger is based on how far in advance they are booking travel, and has predictive abilities that can help the airline scheduling department match the right-sized plane to the route to minimize empty seats. No matter which side you take in the debate, the result is that airlines have been able to generate additional revenue while still engaging in fierce pricing competition and the companies are now less susceptible to failure in the event of an economic downturn. Labor accounts for upwards of one-third of total airline operating expenses, and union contracts make it difficult for management to trim the size of the workforce or reduce costs when times are bad.
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Delta Air Lines bought Northwest, American Airlines Group merged with the combination of US Airways and America West, United Airlines Holdings combined with Continental, and Southwest Airlines bought AirTran. The clauses are significant because airlines often complain that scope clauses can make them less competitive than rivals because they limit the number of smaller cities an airline can serve due to a lack of appropriately sized aircraft. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Delta Air Lines, Southwest Airlines, and Spirit Airlines.
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Delta Air Lines bought Northwest, American Airlines Group merged with the combination of US Airways and America West, United Airlines Holdings combined with Continental, and Southwest Airlines bought AirTran. ETFs with exposure to airlines include the SPDR S&P Transportation ETF (NYSEMKT: XTN), which includes nearly a dozen airlines among its portfolio of 40-plus stocks that also includes ground transportation companies and other shippers. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Delta Air Lines, Southwest Airlines, and Spirit Airlines.
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Consolidation has helped fuel profitability, but there are other factors as well. Airlines have, however, gotten better at managing expenses and generating revenue from non-ticket sources. Image source: Alaska Air Group.
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2019-09-17 00:00:00 UTC
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Why Southwest Airlines Is Shrugging Off the Oil Price Spike (but American Airlines Isn't)
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AAL
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https://www.nasdaq.com/articles/why-southwest-airlines-is-shrugging-off-the-oil-price-spike-but-american-airlines-isnt
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Oil prices skyrocketed on Monday after a drone attack by Yemen's Houthi rebels -- likely with the support of Iran -- took more than half of Saudi Arabia's production offline. This put pressure on the U.S. stock market, with airline stocks hit particularly hard as jet fuel prices followed oil higher.
However, the impact wasn't felt evenly across all airlines. Southwest Airlines (NYSE: LUV) stock actually inched up slightly on Monday, whereas shares of American Airlines (NASDAQ: AAL) plunged 7%. Here's why rising oil prices pose a much bigger threat to American Airlines than to its crosstown rival.
Southwest Airlines vs. American Airlines Stock Performance, data by YCharts.
Oil prices surge -- but remain quite moderate
Last weekend's drone attacks won't impact the oil market's balance very much. Saudi Arabia is already restarting production at some oil fields that had been idle recently and should be able to recover completely within a few months -- or even within weeks. Meanwhile, global oil inventories are high and OPEC production cuts over the past year mean that other countries also have spare production capacity available.
Nevertheless, oil prices are incorporating a bigger risk premium in light of the recent attack. This reflects the possibility of retaliation by Saudi Arabia and its allies, the potential for similar attacks on Saudi production in the future, and the risk of an all-out regional war. The Brent crude spot price surged nearly 15% to around $69 per barrel on Monday, which would boost the price of jet fuel by about $0.20 per gallon. (Prices retreated somewhat on Tuesday.)
This would represent a nearly 10% increase in jet fuel prices compared to what Southwest Airlines and American Airlines have been paying recently. On the other hand, the recent Brent crude price of $69 per barrel is far below the $100-plus prices seen routinely between 2011 and mid-2014. Furthermore, oil prices are still lower than they were a year ago, so airlines should be able to make plenty of money even if the recent jump in oil prices sticks.
Why American is more exposed than Southwest
Investors correctly identified American Airlines as perhaps the biggest victim of the oil price spike. First, unlike Southwest Airlines, American hasn't done any fuel hedging for many years. As a result, it is fully exposed to the recent increase in prices.
The recent spike in oil prices could pinch American Airlines' profit next quarter. Image source: American Airlines.
By contrast, as of June 30, Southwest Airlines had hedged 63% of its projected fuel consumption for the rest of 2019 and more than half of its projected fuel consumption for 2020. It even had substantial hedges in place for 2021. Some of those hedges may only kick in if oil prices rise further, but the bottom line is that for the next couple of years, only a portion of any increase in the market price of jet fuel will filter through to Southwest's bottom line.
That said, there are lots of airlines that don't hedge their fuel exposure, yet American Airlines stock was hit harder than the others. There's a good reason for this. American Airlines' profit margin has been among the lowest in the airline sector recently, which makes its earnings more volatile as revenue and cost trends change.
Last year, American Airlines posted an adjusted pre-tax profit of $2.8 billion, while Southwest Airlines' adjusted pre-tax profit surpassed $3.1 billion. However, American is roughly twice Southwest's size and consumed more than twice as much fuel last year. Thus, even ignoring the impact of hedging, a sudden spike in fuel prices would have more than twice as big an impact on American's profitability compared to that of Southwest.
Even American Airlines should be able to offset this cost pressure
While the 15% spike in oil prices on Monday was a historically big swing for a single day, airlines have experienced plenty of volatility in oil prices over the past few years. Between June 2014 and January 2016, oil prices plunged by 75%, falling from $114 per barrel to less than $30 per barrel. By the end of 2016, oil prices had doubled, recovering to around $55 per barrel. Since then, prices have covered a wide range between $45 and $85 per barrel.
Over the past five years, rapid price declines have tended to boost airlines' profits and rapid price increases have reduced them (as expected). However, each time prices have risen, airlines have been able to gradually recover their lost profits by cutting underperforming routes and boosting fares and fees.
There's a wide gap in profitability between American Airlines' most profitable routes and its underperformers. In fact, the profit margins of the carrier's three most profitable hubs exceed its system average margin by more than 5 percentage points. American Airlines is already shifting capacity toward its higher-margin hubs, and any prolonged increase in jet fuel prices is likely to accelerate these moves. As a result, while a rebound in fuel prices could cause some temporary margin compression at American Airlines, the impact probably won't last long.
10 stocks we like better than Southwest Airlines
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Southwest Airlines wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg is long January 2020 $20 calls on American Airlines Group and long January 2021 $40 calls on Southwest Airlines. The Motley Fool owns shares of and recommends Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Southwest Airlines (NYSE: LUV) stock actually inched up slightly on Monday, whereas shares of American Airlines (NASDAQ: AAL) plunged 7%. Oil prices skyrocketed on Monday after a drone attack by Yemen's Houthi rebels -- likely with the support of Iran -- took more than half of Saudi Arabia's production offline. However, each time prices have risen, airlines have been able to gradually recover their lost profits by cutting underperforming routes and boosting fares and fees.
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Southwest Airlines (NYSE: LUV) stock actually inched up slightly on Monday, whereas shares of American Airlines (NASDAQ: AAL) plunged 7%. This would represent a nearly 10% increase in jet fuel prices compared to what Southwest Airlines and American Airlines have been paying recently. Last year, American Airlines posted an adjusted pre-tax profit of $2.8 billion, while Southwest Airlines' adjusted pre-tax profit surpassed $3.1 billion.
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Southwest Airlines (NYSE: LUV) stock actually inched up slightly on Monday, whereas shares of American Airlines (NASDAQ: AAL) plunged 7%. This would represent a nearly 10% increase in jet fuel prices compared to what Southwest Airlines and American Airlines have been paying recently. Furthermore, oil prices are still lower than they were a year ago, so airlines should be able to make plenty of money even if the recent jump in oil prices sticks.
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Southwest Airlines (NYSE: LUV) stock actually inched up slightly on Monday, whereas shares of American Airlines (NASDAQ: AAL) plunged 7%. This would represent a nearly 10% increase in jet fuel prices compared to what Southwest Airlines and American Airlines have been paying recently. First, unlike Southwest Airlines, American hasn't done any fuel hedging for many years.
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2019-09-17 00:00:00 UTC
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Interesting AAL Put And Call Options For January 2022
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AAL
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https://www.nasdaq.com/articles/interesting-aal-put-and-call-options-for-january-2022-2019-09-17
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Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available this week, for the January 2022 expiration. One of the key inputs that goes into the price an option buyer is willing to pay, is the time value, so with 857 days until expiration the newly available contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new January 2022 contracts and identified one put and one call contract of particular interest.
The put contract at the $27.00 strike price has a current bid of $4.50. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $27.00, but will also collect the premium, putting the cost basis of the shares at $22.50 (before broker commissions). To an investor already interested in purchasing shares of AAL, that could represent an attractive alternative to paying $28.92/share today.
Because the $27.00 strike represents an approximate 7% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 68%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 16.67% return on the cash commitment, or 7.10% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for American Airlines Group Inc, and highlighting in green where the $27.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $30.00 strike price has a current bid of $4.80. If an investor was to purchase shares of AAL stock at the current price level of $28.92/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $30.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 20.33% if the stock gets called away at the January 2022 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if AAL shares really soar, which is why looking at the trailing twelve month trading history for American Airlines Group Inc, as well as studying the business fundamentals becomes important. Below is a chart showing AAL's trailing twelve month trading history, with the $30.00 strike highlighted in red:
Considering the fact that the $30.00 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 40%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 16.60% boost of extra return to the investor, or 7.07% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 49%, while the implied volatility in the call contract example is 50%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $28.92) to be 43%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the Nasdaq 100 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Of course, a lot of upside could potentially be left on the table if AAL shares really soar, which is why looking at the trailing twelve month trading history for American Airlines Group Inc, as well as studying the business fundamentals becomes important. Below is a chart showing AAL's trailing twelve month trading history, with the $30.00 strike highlighted in red: Considering the fact that the $30.00 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available this week, for the January 2022 expiration.
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Below is a chart showing AAL's trailing twelve month trading history, with the $30.00 strike highlighted in red: Considering the fact that the $30.00 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available this week, for the January 2022 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new January 2022 contracts and identified one put and one call contract of particular interest.
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Below is a chart showing AAL's trailing twelve month trading history, with the $30.00 strike highlighted in red: Considering the fact that the $30.00 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available this week, for the January 2022 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new January 2022 contracts and identified one put and one call contract of particular interest.
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At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new January 2022 contracts and identified one put and one call contract of particular interest. Below is a chart showing AAL's trailing twelve month trading history, with the $30.00 strike highlighted in red: Considering the fact that the $30.00 strike represents an approximate 4% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available this week, for the January 2022 expiration.
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6342.0
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2019-09-17 00:00:00 UTC
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S&P 500 Movers: GLW, AAL
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AAL
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https://www.nasdaq.com/articles/sp-500-movers%3A-glw-aal-2019-09-17
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nan
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In early trading on Tuesday, shares of American Airlines Group topped the list of the day's best performing components of the S&P 500 index, trading up 4.4%. Year to date, American Airlines Group has lost about 9.7% of its value.
And the worst performing S&P 500 component thus far on the day is Corning, trading down 8.3%. Corning is lower by about 8.8% looking at the year to date performance.
Two other components making moves today are Apache, trading down 6.8%, and Marketaxess Holdings, trading up 3.1% on the day.
VIDEO: S&P 500 Movers: GLW, AAL
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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VIDEO: S&P 500 Movers: GLW, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Tuesday, shares of American Airlines Group topped the list of the day's best performing components of the S&P 500 index, trading up 4.4%. Year to date, American Airlines Group has lost about 9.7% of its value.
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VIDEO: S&P 500 Movers: GLW, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Tuesday, shares of American Airlines Group topped the list of the day's best performing components of the S&P 500 index, trading up 4.4%. Year to date, American Airlines Group has lost about 9.7% of its value.
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VIDEO: S&P 500 Movers: GLW, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Tuesday, shares of American Airlines Group topped the list of the day's best performing components of the S&P 500 index, trading up 4.4%. Two other components making moves today are Apache, trading down 6.8%, and Marketaxess Holdings, trading up 3.1% on the day.
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VIDEO: S&P 500 Movers: GLW, AAL The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Tuesday, shares of American Airlines Group topped the list of the day's best performing components of the S&P 500 index, trading up 4.4%. And the worst performing S&P 500 component thus far on the day is Corning, trading down 8.3%.
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2019-09-17 00:00:00 UTC
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Tuesday’s Vital Data: Halliburton, Exxon Mobil and American Airlines
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AAL
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https://www.nasdaq.com/articles/tuesdays-vital-data%3A-halliburton-exxon-mobil-and-american-airlines-2019-09-17
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U.S. stock futures are trading lower as investors prepare for the next Federal Reserve rate decision. The market is currently pricing in a 64% probability of a quarter-point rate cut during tomorrow’s meeting. The current target rate is 2% to 2.25%.
Source: Shutterstock
Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.27%, and S&P 500 futures are lower by 0.20%. Nasdaq-100 futures have shed 0.16%.
Trading in the options pits has been remarkably consistent of late with call volume leading the way every single day. Once again, traders favored calls pushing total volume north of 21.5 million. Put volume, meanwhile, climbed to 16.2 million matching recent average levels.
The distance between calls and puts narrowed at the CBOE, however, with the single-session equity put/call volume ratio jumping to a two-week high at 0.68. The rise wasn’t enough to halt the ongoing decline in the 10-day moving average, though. It fell to another two-month low at 0.61.
Options traders swarmed energy stocks Monday. Halliburton (NYSE:) and Exxon Mobil (NYSE:) were two of the largest players among the top four. American Airlines (NYSE:) fell 7.3% on its highest volume session since January.
Let’s take a closer look:
Halliburton (HAL)
Surging oil prices set the tone Monday. And energy stocks were the biggest beneficiary. Traders pushed aggressively into Halliburton shares throughout the session, creating its highest volume session in four years, with over 36.5 million shares traded.
The one-day 11% rally provided a much-needed boost to HAL stock, powering it above its 50-day moving average and a key descending trendline. While much work remains before its intermediate- and long-term trends turn higher, the rapid turnabout is beckoning to bottoming fishers.
The energy sector is one of the only areas that has wholly sat out the latest stage of the bull market. Traders can use the 200-day moving average near $26 as HAL stock’s next target.
On the options trading front, traders came after calls with a vengeance. Activity ballooned to 530% of the average daily volume, with 125,386 total contracts traded; 82% of the trading came from call options alone.
The increased demand drove implied volatility higher on the day to 49% placing it at the 75th percentile of its one-year range. With premiums now juiced, short options strategies are the way to go. I like naked puts into weakness if you believe HAL could be bottoming.
Exxon Mobil (XOM)
As the king of the oil field, Exxon Mobil was an obvious target for traders chasing energy stocks. However, it’s behavior was far less bullish or exciting than that seen in the smaller names. While many companies saw their shares gap and run (a breakaway gap), XOM stock was sold aggressively right at the open and gave back about half of its gains.
It finished the day only up 2.3%. Perhaps the trouble lied with the location of its gap. XOM jumped directly into the 200-day moving average, which has had a history of rejecting its prior rally attempts. The stock had already run ahead of the gap, so maybe this was a case of running too far too fast. Whatever the reason, XOM stock will need some backing and filling before mustering the strength to take out the 200-day.
The options trading mirrored Halliburton’s with calls dominating the day. Total activity zoomed to 413% of the average daily volume, with 125,482 contracts traded. Calls added 84% to the session’s sum.
Implied volatility rallied on the day but remains low at 22% or the 25th percentile of its one-year range. Premiums are pricing in daily moves of $1.01 or 1.4%.
American Airlines (AAL)
The perception that higher oil prices are a headwind for airlines was on full display. While energy stocks soared, airlines soured. American Airlines dropped 7.3% amid massive distribution giving back all of last week’s gains in a single session.
AAL stock was making strides, pushing above its 50-day moving average and turning its short-term trend higher. Unfortunately, Monday unwound it all, pushing the chart back into bearish territory. Until $30 can be reclaimed, bulls should probably shop elsewhere.
On the options trading front, calls outpaced puts despite the thrashing. Activity climbed to 241% of the average daily volume, with 95,155 total contracts traded. Calls accounted for 61% of the day’s tally.
Implied volatility rose to 41% or the 31st percentile of its one-year range. Premiums are now pricing in daily moves of 71 cents or 2.6%.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released to learn how to defend your portfolio against market volatility.
More From InvestorPlace
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (AAL) The perception that higher oil prices are a headwind for airlines was on full display. AAL stock was making strides, pushing above its 50-day moving average and turning its short-term trend higher. The distance between calls and puts narrowed at the CBOE, however, with the single-session equity put/call volume ratio jumping to a two-week high at 0.68.
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American Airlines (AAL) The perception that higher oil prices are a headwind for airlines was on full display. AAL stock was making strides, pushing above its 50-day moving average and turning its short-term trend higher. American Airlines (NYSE:) fell 7.3% on its highest volume session since January.
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American Airlines (AAL) The perception that higher oil prices are a headwind for airlines was on full display. AAL stock was making strides, pushing above its 50-day moving average and turning its short-term trend higher. Traders pushed aggressively into Halliburton shares throughout the session, creating its highest volume session in four years, with over 36.5 million shares traded.
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American Airlines (AAL) The perception that higher oil prices are a headwind for airlines was on full display. AAL stock was making strides, pushing above its 50-day moving average and turning its short-term trend higher. Put volume, meanwhile, climbed to 16.2 million matching recent average levels.
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2019-09-17 00:00:00 UTC
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Warren Buffett's Most Baffling Stock Holdings
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https://www.nasdaq.com/articles/warren-buffetts-most-baffling-stock-holdings-2019-09-17
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nan
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Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) CEO Warren Buffett is perhaps the greatest investor of our time. Berkshire's book value has grown nearly 1.1 million percent since 1965, and Buffett himself has seen his net worth soar to $82 billion from just $10,000 in the mid-1950s.
Today, "Buffett's portfolio" -- the affable name given to Berkshire Hathaway's nearly $218 billion in invested assets -- holds 47 securities from a variety of industries and sectors.
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Image source: The Motley Fool.
A vast majority of these companies deliver on the qualities we'd expect to find in the companies Buffett picks out for the long term. For instance, Berkshire's largest holding, Apple, has incredible branding power and a significant U.S. smartphone market share, and is a leader in smartphone and services innovation.
Then there's Bank of America, Buffett's second-largest holding, which also has excellent branding power and has been a moneymaking machine now that it's put litigation expenses in the rearview mirror and reduced its operating expenses.
However, there are a handful of Buffett stock holdings that just make you scratch your head in disbelief.
Johnson & Johnson
Just prior to the Great Recession, healthcare conglomerate Johnson & Johnson (NYSE: JNJ) was a mainstay in Berkshire's portfolio. The Oracle of Omaha had built a nearly 49-million-share position in the company and was, at one time, J&J's fourth-largest shareholder.
But subsequent to the Great Recession, Buffett headed for the exit. By 2012, Berkshire had pared down its holdings to only 492,000 shares, with 327,100 shares of Johnson & Johnson stock remaining in the portfolio today. That's about $42.7 million in market value, if you're curious.
The big question is: Why does Buffett continue to hang onto such a nominal position in Johnson & Johnson?
Image source: Getty Images.
Mind you, I believe J&J to be a great company, with each of its three operating segments offering something that the other two don't bring to the table. Consumer healthcare products is growing the slowest of any division, but it generates predictable cash flow and strong pricing power. The medical device segment is growing modestly at the moment, but it offers a long-tail growth opportunity for an aging population. And, lastly, pharmaceuticals generates the bulk of J&J's margins, although brand-name therapies only have a finite period of exclusivity.
However, the Johnson & Johnson of 2019 looks very little like the J&J of 2007. Back when Buffett was a major stakeholder in the first quarter of 2007, pharmaceutical revenue made up 41% of total sales. As of the second quarter of 2019, 51% of total sales came from pharmaceuticals. Though this is a higher-margin segment, Buffett has long had an aversion to owning pharmaceuticals, mainly because of the extra research that's required for keeping tabs on drug trials.
With J&J no longer as diversified as it once was, it's a wonder why Buffett continues to hold this stock.
All airlines, save for Southwest
Arguably a more baffling move than hanging onto a relatively small position in Johnson & Johnson for years is Buffett's recent fondness for the airline industry. Currently, Berkshire Hathaway owns $1.3 billion worth of American Airlines Group (NASDAQ: AAL), $4.2 billion worth of Delta Air Lines (NYSE: DAL), $2.9 billion worth of Southwest Airlines (NYSE: LUV), and $2 billion worth of United Airlines (NASDAQ: UAL). These positions respectively represent stakes of 9.8%, 10.9%, 10%, and 8.5% in each company.
These airlines were added in bulk by Buffett in the latter half of 2016. This was shortly after the price of crude oil went into an absolute free fall, pushing down the price of refined petroleum products. For airlines, it meant the loss of ticket-pricing power, but also a significant reduction in their primary expense, jet fuel. As long as crude prices remain tame and the U.S. economy keeps plugging along, airlines should offer reasonably strong profits and attractive valuations, relative to the broader market. At least, that's my thesis if I'm in Buffett's shoes in 2016.
Image source: Getty Images.
But here's the thing: Buffett has been highly critical of airlines in the past. In Buffett's annual shareholder letter in 2007, he had this to say about the airline industry:
The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.
Yet, Buffett has sunk more than $10 billion (close to 5% of his portfolio) into a generally low-margin business model that's struggled to survive recessions in the past -- not to mention, most airlines are lugging around a lot of debt. American Airlines has $29.3 billion in net debt, followed by United Airlines and Delta Air Lines at $15.8 billion and $15.4 billion, respectively. Southwest is perhaps the one exception to the rule, with $570 million in net debt and a history of staying profitable, even during recessions.
Why Buffett owns American Airlines, Delta Air Lines, and United Airlines is a mystery to Yours Truly.
Teva Pharmaceutical Industries
Another Buffett holding that's a real head-scratcher is brand-name and generic-drug producer Teva Pharmaceutical Industries (NYSE: TEVA). Although, this holding has some semblance of an explanation, with one of Buffett's investing managers appearing to have opened the position and subsequently adding to it.
Image source: Getty Images.
Suffice it to say that Teva Pharmaceutical doesn't meet the qualities you'd typically look for in a Buffett stock. In fact, it's almost easier to list what's gone right for Teva over the past two years than to tackle what's gone wrong. In no particular order, Teva has:
Contended with persistent generic-drug price weakness;
Eliminated its dividend and substantially lowered its adjusted earnings per share guidance;
Witnessed top-level executive turnover;
Paid a settlement regarding bribery charges in a handful of overseas countries;
Is dealing with more than $26 billion in net debt;
Is facing a myriad of opioid lawsuits for most U.S. states; and
Had its lead brand-name drug, Copaxone, lose exclusivity and face generic competition.
Keeping in mind that Buffett isn't a fan of keeping up with clinical trials, or of companies facing large legal liabilities, it's a wonder that Teva remains in Buffett's portfolio. But, as noted, it appears to have been added by one of Buffett's team rather than the Oracle of Omaha himself.
For what it's worth, I do believe Teva is a rebound candidate and that many of its issues are overblown or more than factored into its valuation. Nevertheless, this is going to be a long-winded turnaround and is, for now, a blemish on Buffett's otherwise illustrious stock-picking career.
10 stocks we like better than Teva Pharmaceutical Industries
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Sean Williams owns shares of Bank of America and Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), Delta Air Lines, and Southwest Airlines. The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Currently, Berkshire Hathaway owns $1.3 billion worth of American Airlines Group (NASDAQ: AAL), $4.2 billion worth of Delta Air Lines (NYSE: DAL), $2.9 billion worth of Southwest Airlines (NYSE: LUV), and $2 billion worth of United Airlines (NASDAQ: UAL). In Buffett's annual shareholder letter in 2007, he had this to say about the airline industry: The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Yet, Buffett has sunk more than $10 billion (close to 5% of his portfolio) into a generally low-margin business model that's struggled to survive recessions in the past -- not to mention, most airlines are lugging around a lot of debt.
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Currently, Berkshire Hathaway owns $1.3 billion worth of American Airlines Group (NASDAQ: AAL), $4.2 billion worth of Delta Air Lines (NYSE: DAL), $2.9 billion worth of Southwest Airlines (NYSE: LUV), and $2 billion worth of United Airlines (NASDAQ: UAL). The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), Delta Air Lines, and Southwest Airlines. The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple.
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Currently, Berkshire Hathaway owns $1.3 billion worth of American Airlines Group (NASDAQ: AAL), $4.2 billion worth of Delta Air Lines (NYSE: DAL), $2.9 billion worth of Southwest Airlines (NYSE: LUV), and $2 billion worth of United Airlines (NASDAQ: UAL). Teva Pharmaceutical Industries Another Buffett holding that's a real head-scratcher is brand-name and generic-drug producer Teva Pharmaceutical Industries (NYSE: TEVA). The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple.
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Currently, Berkshire Hathaway owns $1.3 billion worth of American Airlines Group (NASDAQ: AAL), $4.2 billion worth of Delta Air Lines (NYSE: DAL), $2.9 billion worth of Southwest Airlines (NYSE: LUV), and $2 billion worth of United Airlines (NASDAQ: UAL). Think airlines. Teva Pharmaceutical Industries Another Buffett holding that's a real head-scratcher is brand-name and generic-drug producer Teva Pharmaceutical Industries (NYSE: TEVA).
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6345.0
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2019-09-16 00:00:00 UTC
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Why Aurora Cannabis, American Airlines Group, and Construction Partners Slumped Today
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AAL
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https://www.nasdaq.com/articles/why-aurora-cannabis-american-airlines-group-and-construction-partners-slumped-today-2019
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Wall Street didn't have a good start to the week on Monday. Investors weren't happy to learn about massive explosions linked to a drone attack in Saudi Arabia, and fear about global energy supply sent crude oil prices soaring. That was good for energy stocks, but it made most market participants nervous about whether the vulnerable economy will be able to sustain any further pressure. Some companies saw steeper declines in their share prices for a variety of reasons. Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Here's why they did so poorly.
Aurora gets downgraded
Shares of Aurora Cannabis dropped more than 8% after the Canadian marijuana stock got poor comments from analysts. Stifel cut its rating on the cannabis specialist from hold to sell, reducing its price target from 7 Canadian dollars to CA$5, or about $3.75. Stifel believes that marijuana investors are generally disappointed with how the sector has performed lately, and that might make it harder for Aurora to get the financing it'll need in order to achieve its global expansion goals. In the absence of a major catalyst, such as complete legalization of marijuana across the U.S. market, Stifel's finding it hard to see any reasons for Aurora shareholders to be optimistic in the near term.
Image source: Aurora Cannabis.
American Airlines to get hit at the pump
American Airlines Group saw its shares fall 7% as airline stocks in general reacted negatively to the move higher in energy prices. Fuel costs are a major component of the expense structure for airlines, and American in particular faces more challenging conditions in the form of more significant debt, labor disputes, exposure to the 737 MAX controversy, and high fuel consumption. Airlines have come a long way, so few expect rising fuel prices to cause American no longer to be profitable at all. However, the industry remains competitive, and more pressure on the cost front will take away American's flexibility to respond to initiatives that rivals put in place.
Construction Partners has shareholders selling some stock
Finally, shares of Construction Partners slumped 6%. The Alabama-based civil infrastructure company announced a secondary stock offering, saying that major shareholder SunTx Capital Management intends to sell 5 million shares. That would've produced worth roughly $785 million in proceeds as of Friday's close, but the vote of no confidence from SunTx let some of the air out of the stock. Even with the drop, though, Construction Partners is still up more than 50% since the beginning of the year, and many see plenty more opportunity for the infrastructure specialist to benefit from projects and strategic moves in the future.
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*Stock Advisor returns as of June 1, 2019.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Investors weren't happy to learn about massive explosions linked to a drone attack in Saudi Arabia, and fear about global energy supply sent crude oil prices soaring. Stifel believes that marijuana investors are generally disappointed with how the sector has performed lately, and that might make it harder for Aurora to get the financing it'll need in order to achieve its global expansion goals.
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Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Construction Partners has shareholders selling some stock Finally, shares of Construction Partners slumped 6%. Offer from The Motley Fool: The 10 best stocks to buy now Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market.
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Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Aurora gets downgraded Shares of Aurora Cannabis dropped more than 8% after the Canadian marijuana stock got poor comments from analysts. American Airlines to get hit at the pump American Airlines Group saw its shares fall 7% as airline stocks in general reacted negatively to the move higher in energy prices.
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Aurora Cannabis (NYSE: ACB), American Airlines Group (NASDAQ: AAL), and Construction Partners (NASDAQ: ROAD) were among the worst performers. Aurora gets downgraded Shares of Aurora Cannabis dropped more than 8% after the Canadian marijuana stock got poor comments from analysts. The Alabama-based civil infrastructure company announced a secondary stock offering, saying that major shareholder SunTx Capital Management intends to sell 5 million shares.
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6346.0
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2019-09-16 00:00:00 UTC
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Why Shares of American Airlines Are Descending Today
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https://www.nasdaq.com/articles/why-shares-of-american-airlines-are-descending-today-2019-09-16
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What happened
Shares of American Airlines Group (NASDAQ: AAL) fell more than 7% at the open Monday, before recovering slightly, following a weekend spike in oil prices. The entire airline sector is under pressure on Monday, but American is viewed as more vulnerable to a slowdown because of its relatively weak balance sheet compared to its peers.
So what
Oil prices spiked higher on Monday morning following a weekend attack on a Saudi Arabian oil facility took down more than 5.5 million barrels of production. Saudi officials expect to get at least one-third of that capacity back online quickly, but a full recovery could take weeks, if not months.
American Airlines is stuck on the tarmac. Image source: American Airlines.
American shares led the declines, but shares of Delta Air Lines (NYSE: DAL) and United Airlines Holdings (NASDAQ: UAL) were each down more than 2%, and shares of Southwest Airlines (NYSE: LUV) lost less than 1%. Should oil prices remain elevated, airlines can recoup some of the added expense over time via higher ticket prices, but in the near term they will have to absorb it.
Airlines are massive consumers of fuel and so typically come under pressure when oil prices rocket higher. In 2018 the global industry spent nearly $180 billion -- nearly one-fourth of total operating expenses -- on fuel, according to an industry trade group.
American, as the largest consumer of fuel, is likely to feel more of an impact than its peers. The airline is also seen as more at risk in the event of a prolonged downturn because of its elevated debt levels compared to its peers. The company has other issues as well, including labor unrest and the scheduling disruptions due to the grounding of Boeing's 737 MAX.
Airline Total Long Term Debt (Quarterly) data by YCharts
Now what
In years past an oil spike was typically a harbinger of a new round of equity-crushing airline bankruptcies. The industry is much healthier now than it was in the past, and American appears at no risk of a Chapter 11 filing, but investor memories die hard.
While American is not in danger of collapse, given the challenges on its plate it is unlikely to be included on a list of top stocks any time soon. Over the next few years the airline intends to revamp its route network and pricing strategies to improve profitability while turning its attention away from capital expenditures and toward deploying its cash to pay down debt.
The potential is there for American, but the oil spike just further complicates an already turbulent near-term outlook for the airline.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 7% at the open Monday, before recovering slightly, following a weekend spike in oil prices. The entire airline sector is under pressure on Monday, but American is viewed as more vulnerable to a slowdown because of its relatively weak balance sheet compared to its peers. Over the next few years the airline intends to revamp its route network and pricing strategies to improve profitability while turning its attention away from capital expenditures and toward deploying its cash to pay down debt.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 7% at the open Monday, before recovering slightly, following a weekend spike in oil prices. American shares led the declines, but shares of Delta Air Lines (NYSE: DAL) and United Airlines Holdings (NASDAQ: UAL) were each down more than 2%, and shares of Southwest Airlines (NYSE: LUV) lost less than 1%. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 7% at the open Monday, before recovering slightly, following a weekend spike in oil prices. American shares led the declines, but shares of Delta Air Lines (NYSE: DAL) and United Airlines Holdings (NASDAQ: UAL) were each down more than 2%, and shares of Southwest Airlines (NYSE: LUV) lost less than 1%. 10 stocks we like better than American Airlines Group When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 7% at the open Monday, before recovering slightly, following a weekend spike in oil prices. The entire airline sector is under pressure on Monday, but American is viewed as more vulnerable to a slowdown because of its relatively weak balance sheet compared to its peers. So what Oil prices spiked higher on Monday morning following a weekend attack on a Saudi Arabian oil facility took down more than 5.5 million barrels of production.
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6347.0
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2019-09-16 00:00:00 UTC
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Nasdaq 100 Movers: AAL, WDAY
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https://www.nasdaq.com/articles/nasdaq-100-movers%3A-aal-wday-2019-09-16
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In early trading on Monday, shares of Workday topped the list of the day's best performing components of the Nasdaq 100 index, trading up 2.5%. Year to date, Workday registers a 7.5% gain.
And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 5.8%. American Airlines Group is lower by about 12.1% looking at the year to date performance.
Two other components making moves today are United Airlines Holdings, trading down 3.0%, and Incyte, trading up 2.3% on the day.
VIDEO: Nasdaq 100 Movers: AAL, WDAY
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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VIDEO: Nasdaq 100 Movers: AAL, WDAY The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 5.8%. American Airlines Group is lower by about 12.1% looking at the year to date performance.
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VIDEO: Nasdaq 100 Movers: AAL, WDAY The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Monday, shares of Workday topped the list of the day's best performing components of the Nasdaq 100 index, trading up 2.5%. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 5.8%.
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VIDEO: Nasdaq 100 Movers: AAL, WDAY The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. In early trading on Monday, shares of Workday topped the list of the day's best performing components of the Nasdaq 100 index, trading up 2.5%. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 5.8%.
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VIDEO: Nasdaq 100 Movers: AAL, WDAY The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. And the worst performing Nasdaq 100 component thus far on the day is American Airlines Group, trading down 5.8%. American Airlines Group is lower by about 12.1% looking at the year to date performance.
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6348.0
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2019-09-16 00:00:00 UTC
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S&P 500 Movers: VLO, MRO
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https://www.nasdaq.com/articles/sp-500-movers%3A-vlo-mro-2019-09-16
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In early trading on Monday, shares of Marathon Oil topped the list of the day's best performing components of the S&P 500 index, trading up 9.8%. Year to date, Marathon Oil has lost about 2.8% of its value.
And the worst performing S&P 500 component thus far on the day is Valero Energy, trading down 5.9%. Valero Energy is showing a gain of 7.3% looking at the year to date performance.
Two other components making moves today are American Airlines Group, trading down 5.6%, and Halliburton, trading up 9.3% on the day.
VIDEO: S&P 500 Movers: VLO, MRO
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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And the worst performing S&P 500 component thus far on the day is Valero Energy, trading down 5.9%. Valero Energy is showing a gain of 7.3% looking at the year to date performance. VIDEO: S&P 500 Movers: VLO, MRO The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In early trading on Monday, shares of Marathon Oil topped the list of the day's best performing components of the S&P 500 index, trading up 9.8%. Year to date, Marathon Oil has lost about 2.8% of its value. And the worst performing S&P 500 component thus far on the day is Valero Energy, trading down 5.9%.
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In early trading on Monday, shares of Marathon Oil topped the list of the day's best performing components of the S&P 500 index, trading up 9.8%. And the worst performing S&P 500 component thus far on the day is Valero Energy, trading down 5.9%. Two other components making moves today are American Airlines Group, trading down 5.6%, and Halliburton, trading up 9.3% on the day.
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In early trading on Monday, shares of Marathon Oil topped the list of the day's best performing components of the S&P 500 index, trading up 9.8%. And the worst performing S&P 500 component thus far on the day is Valero Energy, trading down 5.9%. VIDEO: S&P 500 Movers: VLO, MRO The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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6349.0
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2019-09-11 00:00:00 UTC
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When Does Patience Run Out for Boeing Stock?
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https://www.nasdaq.com/articles/when-does-patience-run-out-for-boeing-stock-2019-09-11
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Investors have given Boeing (NYSE:) stock a long leash. Boeing stock has traded mostly sideways since March, despite the fact that news over that stretch hasn’t seemed particularly positive.
Source: Alex JW Robinson / Shutterstock.com
Of course, Boeing stock fell sharply after in March. Since then, the company hasn’t given investors much to be excited about.
Boeing Co took a $5 billion charge with . Management targets for the return of the 737 MAX to service seem hugely optimistic, and the 777X faces potential delays as well. The defense side of the business has come under criticism for performance under a key Air Force contract.
And yet investors have shrugged off those worries. A brief dip in August reversed quickly. Wall Street remains reasonably supportive, with an average price target of $411 suggesting 12% upside.
The willingness of investors and analysts to support Boeing Co stock does make some sense. As I wrote last month, Boeing Co probably . But it seemed then like investor patience with BA stock was starting to give way, and if Boeing keeps missing its targets, it may do so again.
MAX Delays Hit Deliveries for Boeing Co
As noted, the grounding of the MAX fleet hit Q2 earnings — and will continue to hit profits going forward. Boeing announced on Tuesday that it had in August, less than 30% of what it did the year before.
To be sure, that figure isn’t necessarily surprising, though year-to-date deliveries are lagging analyst expectations. But deliveries aren’t the only issue. As detailed on the , Boeing is still producing 42 737s a month, even with the MAX fleet grounded. And CEO Dennis Muilenberg said on that call that if the MAX didn’t return to service by the end of the year, production potentially could be suspended.
Increasingly, that looks like it will be the case. Southwest Airlines (NYSE:) has canceled MAX flights into 2020. American Airlines Group (NYSE:) has pulled the MAX from its schedule through December. E.U. regulators are .
Meanwhile, Boeing still hasn’t updated its prediction from the Q2 call for a return to service early in the fourth quarter. That doesn’t inspire confidence. If the MAX slips into 2020, it will cost the company billions in dollars in airline reimbursements, storage fees and incremental production costs. It may also cost Boeing Co the confidence of investors.
The 777X, the KC-46 and BA Stock
What is frustrating about BA stock at the moment is that the 737 MAX isn’t the only issue. The 777X is facing delays as well. Issues by General Electric (NYSE:) admittedly are the key problem. But Boeing had a failure with a so-called “load test” this week, which could further push its release into 2020.
On the defense side, the company’s KC-46 aerial refueling tanker continues to struggle. Debris continues to be left on planes, leading to increased inspections and delayed deliveries. Acting Secretary of the Air Force Matthew Donovan said this summer that Boeing Co management had referred to the issues as ““.
The problems, which truly come down to execution, color Boeing’s ability to get future U.S. military contracts. With intense competition from the likes of Lockheed Martin (NYSE:), the KC-46 only seems to add to the worries here.
The Case for, and Against, Boeing Stock
But, again, investors have largely shrugged off all of those concerns over the last six months. And there’s one reason why: as an analyst put it earlier this year, Boeing is almost .
After all, worldwide demand for air travel is only going to rise going forward amid the rise of the middle class in developing nations. Backlogs at both Boeing and rival Airbus (OTCMKTS:) extend into the 2030s. And there simply is no competition, even though China is trying to break that duopoly.
But even in the context of a roughly $200 billion market cap, a few billion dollars in penalties, fines and costs matter. So does pushing revenue — and profits — out a few quarters or a few years. Even if Boeing can avoid the worst-case scenario — a permanent grounding of the MAX — the costs are piling up. At some point, that’s going to matter.
As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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But it seemed then like investor patience with BA stock was starting to give way, and if Boeing keeps missing its targets, it may do so again. And CEO Dennis Muilenberg said on that call that if the MAX didn’t return to service by the end of the year, production potentially could be suspended. Acting Secretary of the Air Force Matthew Donovan said this summer that Boeing Co management had referred to the issues as ““.
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The defense side of the business has come under criticism for performance under a key Air Force contract. The willingness of investors and analysts to support Boeing Co stock does make some sense. MAX Delays Hit Deliveries for Boeing Co As noted, the grounding of the MAX fleet hit Q2 earnings — and will continue to hit profits going forward.
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Investors have given Boeing (NYSE:) stock a long leash. MAX Delays Hit Deliveries for Boeing Co As noted, the grounding of the MAX fleet hit Q2 earnings — and will continue to hit profits going forward. The Case for, and Against, Boeing Stock But, again, investors have largely shrugged off all of those concerns over the last six months.
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If the MAX slips into 2020, it will cost the company billions in dollars in airline reimbursements, storage fees and incremental production costs. It may also cost Boeing Co the confidence of investors. The Case for, and Against, Boeing Stock But, again, investors have largely shrugged off all of those concerns over the last six months.
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6350.0
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2019-09-07 00:00:00 UTC
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Why Shares of American Airlines Were Grounded in August
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https://www.nasdaq.com/articles/why-shares-of-american-airlines-were-grounded-in-august-2019-09-08
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What happened
Shares of American Airlines Group (NASDAQ: AAL) lost 13.8% in August, according to data provided by S&P Global Market Intelligence, as the airline continues to be besieged by negative headlines. It could have been worse: Shares of American were down nearly 20% for the month before rallying in the final days of August.
So what
American Airlines has lagged its peers in terms of profitability and has suffered disruptions due to labor issues and troubles with the Boeing 737 MAX airplane. Airline investors are growing nervous about capacity expansion and the threat of an economic slowdown, and given Boeing's highest-in-its-sector debt load, American's shares are taking the brunt of negative news about the industry.
Image source: American Airlines Group.
American's weakness coincided with a market panic as the yield on a 10-year Treasury bond fell below the two-year rate, creating a so-called inverted yield curve that many investors believe is a signal that a recession is imminent. Airlines historically have struggled during a downturn, and American, due to its debt and other issues, appears particularly poorly suited for a slowdown at this time.
There were other headwinds in the month as well. In mid-August American won a court injunction against mechanics who the company had accused of illegal slowdowns it claimed harmed operations during the key summer travel season. In court that's a win, but the headlines only served to emphasize how difficult relations between management and that important work group have become.
Days later the Department of Justice announced that American has agreed to pay $22 million to resolve allegations that it falsely reported transfer times for U.S. mail it was transporting.
Now what
American has its share of problems and is unlikely to be on a list of top stocks any time soon, but it is far from a lost cause. The airline is arguably better positioned than its rivals to weather the U.S.-China trade spat and a broader slowdown in Asia, thanks to cutbacks announced last year. It's also in the early days of revamping its route network and pricing strategies to increase profitability. American expects capital expenditures (capex) spending to come down dramatically over the next few years, which will free up cash to attack its debt load.
Airlines in general, and American in particular, are likely to trade in the quarters to come on recession fears and based on the price of oil. That could lead to continued volatility, but for investors with a multiyear horizon, there is an opportunity to buy low. Just don't be surprised if the captain fails to turn off the "fasten seat belt" sign for quite a long time.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of June 1, 2019
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of American Airlines Group (NASDAQ: AAL) lost 13.8% in August, according to data provided by S&P Global Market Intelligence, as the airline continues to be besieged by negative headlines. Airline investors are growing nervous about capacity expansion and the threat of an economic slowdown, and given Boeing's highest-in-its-sector debt load, American's shares are taking the brunt of negative news about the industry. In mid-August American won a court injunction against mechanics who the company had accused of illegal slowdowns it claimed harmed operations during the key summer travel season.
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What happened Shares of American Airlines Group (NASDAQ: AAL) lost 13.8% in August, according to data provided by S&P Global Market Intelligence, as the airline continues to be besieged by negative headlines. Airline investors are growing nervous about capacity expansion and the threat of an economic slowdown, and given Boeing's highest-in-its-sector debt load, American's shares are taking the brunt of negative news about the industry. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them!
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What happened Shares of American Airlines Group (NASDAQ: AAL) lost 13.8% in August, according to data provided by S&P Global Market Intelligence, as the airline continues to be besieged by negative headlines. 10 stocks we like better than American Airlines Group When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them!
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What happened Shares of American Airlines Group (NASDAQ: AAL) lost 13.8% in August, according to data provided by S&P Global Market Intelligence, as the airline continues to be besieged by negative headlines. That's right -- they think these 10 stocks are even better buys. The Motley Fool has no position in any of the stocks mentioned.
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6351.0
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2019-09-03 00:00:00 UTC
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United Airlines and American Airlines Extend Boeing 737 MAX Cancellations
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AAL
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https://www.nasdaq.com/articles/united-airlines-and-american-airlines-extend-boeing-737-max-cancellations-2019-09-03
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The Boeing (NYSE: BA) 737 MAX still needs to clear a few hurdles before it can return to service. However, over the past two months, Boeing has made significant progress toward finalizing software fixes for the issues identified by the FAA and other aviation regulators. This has kept the Boeing 737 MAX on track for an official FAA validation flight sometime next month.
That said, even an October validation flight probably wouldn't leave enough time for airlines to put their 737 MAX fleets back into service by early November -- as United Airlines (NASDAQ: UAL) and American Airlines (NASDAQ: AAL) had been planning until recently. As a result, both airline giants recently removed all 737 MAX flights from their schedules until December.
Two major airlines are extending their 737 MAX flight cancellations into December. Image source: Boeing.
Another round of delays
As of mid-July, United Airlines had hoped to put its Boeing 737 MAX jets back into service on Nov. 3. However, in the face of uncertainty about the timeline for recertifying the 737 MAX, the carrier announced late last week that it would remove the troubled model from its schedules until Dec. 19. It will cancel nearly 100 flights a day during this period.
American Airlines followed suit on Sunday morning. The world's largest airline extended its 737 MAX flight cancellations from Nov. 2 to Dec. 3. This will force it to cancel an average of about 140 flights per day during the month of November.
While American Airlines remains slightly more optimistic than United about when the Boeing 737 MAX will return, there is little practical difference between the two airlines' recent schedule changes. Neither one will have the 737 MAX available for the busy Thanksgiving travel weekend, but both still hope to get the aircraft back in service in time for the peak season around Christmas. The period in between those two holidays tends to be one of the slowest times of the year for airlines.
Balancing schedule optimization against certainty
Canceling flights over the Thanksgiving long weekend will lead to lost profits, particularly for American Airlines. Whereas United has expanded its fleet significantly during 2019, American will end 2019 with fewer mainline aircraft than it had at the beginning of the year, even if the Boeing 737 MAX were to be ungrounded. This is largely due to the carrier's decision to retire its aging fleet of MD-80s this week.
As recently as a week ago, American Airlines officials stated that they were confident that the Boeing 737 MAX would reenter service before year-end. However, nothing is guaranteed until the FAA actually recertifies the aircraft and approves new pilot training procedures. The FAA and other global aviation regulators are still demanding more information from Boeing, which suggests that there is a real risk that the return to service will be delayed longer than Boeing and many airline officials expect.
American Airlines will have to fly a reduced schedule over Thanksgiving weekend this year. Image source: American Airlines.
Maintaining an aggressive schedule for getting the Boeing 737 MAX back would potentially enable American and United to carry more passengers around Thanksgiving. The problem is that if the plane is not ready by then, the airlines could be forced to cancel flights at the last minute, alienating impacted customers. Last-minute cancellations during a holiday period would be particularly disruptive, because it would be hard to find space to rebook on other flights.
Airlines seem to have universally decided that canceling flights preemptively is the lesser of the two evils. That means Boeing needs to get its act together and move quickly over the next month or two to assure airlines that the 737 MAX will be ready to fly in December. Otherwise, United Airlines and American Airlines could give up on getting the 737 MAX back in time for Christmas and extend their preemptive cancellations into January.
10 stocks we like better than Boeing
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Boeing wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg is long January 2020 $20 calls on American Airlines Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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That said, even an October validation flight probably wouldn't leave enough time for airlines to put their 737 MAX fleets back into service by early November -- as United Airlines (NASDAQ: UAL) and American Airlines (NASDAQ: AAL) had been planning until recently. However, over the past two months, Boeing has made significant progress toward finalizing software fixes for the issues identified by the FAA and other aviation regulators. Balancing schedule optimization against certainty Canceling flights over the Thanksgiving long weekend will lead to lost profits, particularly for American Airlines.
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That said, even an October validation flight probably wouldn't leave enough time for airlines to put their 737 MAX fleets back into service by early November -- as United Airlines (NASDAQ: UAL) and American Airlines (NASDAQ: AAL) had been planning until recently. Another round of delays As of mid-July, United Airlines had hoped to put its Boeing 737 MAX jets back into service on Nov. 3. Otherwise, United Airlines and American Airlines could give up on getting the 737 MAX back in time for Christmas and extend their preemptive cancellations into January.
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That said, even an October validation flight probably wouldn't leave enough time for airlines to put their 737 MAX fleets back into service by early November -- as United Airlines (NASDAQ: UAL) and American Airlines (NASDAQ: AAL) had been planning until recently. While American Airlines remains slightly more optimistic than United about when the Boeing 737 MAX will return, there is little practical difference between the two airlines' recent schedule changes. Otherwise, United Airlines and American Airlines could give up on getting the 737 MAX back in time for Christmas and extend their preemptive cancellations into January.
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That said, even an October validation flight probably wouldn't leave enough time for airlines to put their 737 MAX fleets back into service by early November -- as United Airlines (NASDAQ: UAL) and American Airlines (NASDAQ: AAL) had been planning until recently. American Airlines will have to fly a reduced schedule over Thanksgiving weekend this year. Otherwise, United Airlines and American Airlines could give up on getting the 737 MAX back in time for Christmas and extend their preemptive cancellations into January.
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6352.0
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2019-09-03 00:00:00 UTC
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These 4 Stocks Have Cost Warren Buffett More Than $6 Billion in 2019
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AAL
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https://www.nasdaq.com/articles/these-4-stocks-have-cost-warren-buffett-more-than-%246-billion-in-2019-2019-09-03
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When the history books are written, Warren Buffett will likely go down as one of the greatest investors of our time. In a little more than six decades, the Oracle of Omaha, as he's affably known, has grown roughly $10,000 in seed capital to a net worth of almost $80 billion. Mind you, his net worth would extend well beyond $100 billion if not for generous charitable contributions throughout the years.
As the CEO of conglomerate Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B), Buffett has overseen the acquisition of roughly five dozen businesses from a variety of industries and sectors, as well as countless investments. Right now Berkshire Hathaway oversees an investment portfolio with a net worth of more than $200 billion, and also has a war chest of $122.4 billion, as of the end of its most recent quarter. Suffice it to say, Buffett has had a lot of success as an investor.
But one thing Buffett and his team are not is perfect. Even the greatest investors on the planet are bound to make mistakes from time to time, and Buffett is no exception.
Since the beginning of the year, a vast majority of Berkshire Hathaway's 47 securities still held in its portfolio as of June 30, 2019, have gone up. That's generally good news for Berkshire shareholders and Buffett's long-term buy-and-hold ethos. However, four laggards in Buffett's portfolio have cost the company a pretty penny on a year-to-date basis. Combined, the following four stocks have lost almost $6.1 billion in value in 2019, inclusive of dividends paid.
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Image source: The Motley Fool.
Kraft Heinz: $5.13 billion in market value lost
There's no question that the disaster du jour for Buffett in 2019 has been the utter collapse of food and beverage company Kraft Heinz (NASDAQ: KHC), which is down almost 41% through August. The 325.6 million shares of Kraft that Berkshire Hathaway owns gives it a whopping 26.7% stake in the company -- and also quite the red mark in 2019.
The big issue with Kraft Heinz is its ugly balance sheet. Earlier this year, the company took a $15.4 billion writedown on a number of its popular brands, although it's still left with $36 billion in goodwill and $29.8 billion in long-term debt as of its most recent quarter. What Kraft Heinz needs is to spend money to reignite growth in its brands, but it simply doesn't have the financial means to do so. Kraft Heinz may be forced to sell some of its brands to reduce its long-term debt, but selling in a position of weakness is unlikely to get the company its asking price. And, as the icing on the cake, the company also reduced its dividend.
Though Buffett has admitted that Berkshire overpaid for its stake in Kraft Heinz, he's also committed to the position. The problem with being such a large shareholder is that there isn't a good way to pare down Berkshire's stake without adversely impacting Kraft Heinz's stock. For the time being, Buffett can do no more than watch and wait for Kraft Heinz to right the ship.
Image source: Getty Images.
Teva Pharmaceutical Industries: $368.5 million in market value lost
While Kraft Heinz is Berkshire's monetary loser, brand-name and generic-drug developer Teva Pharmaceutical Industries (NYSE: TEVA) is the company's biggest percentage loser, with 55.3% of its market value being wiped away through August. Even though Teva wasn't a direct Buffett pick -- a member of his team chose to purchase Teva -- it's nevertheless cost nearly $369 million in 2019.
Teva has been a mess for the better part of two years now, having contended with a bribery scandal, the departure of top-level executives, the loss of exclusivity on its top-selling brand-name drug Copaxone for multiple sclerosis, and generic-drug price weakness. To make matters worse, the company has also been contending with a slew of opioid-based lawsuits. With Teva sporting more than $28 billion in debt, there's real concern about the company's ability to survive and thrive over the long run, which has been clearly reflected in its share price.
As a Teva shareholder, I don't deny the issues that lie ahead. However, as one of the largest generic-drug producers in the world, Teva shouldn't be written off just yet. The company remains profitable, and CEO Kare Schultz has overseen a roughly $8 billion reduction in net debt and the elimination of almost $3 billion in annual expenses. The turnaround could be slow, but I expect Teva to be just fine.
Image source: Getty Images.
Bank of New York Mellon: $339.1 million in market value lost
Surprisingly, the traditionally nonvolatile Bank of New York Mellon (NYSE: BK) has been something of a lemon for Warren Buffett in 2019. The custodial bank and asset management firm has lost about 11% of its value, which, inclusive of dividends, has saddled Berkshire with a year-to-date loss of $339.1 million.
Bank of New York Mellon has been dealing with two issues that have negatively impacted its business. The first has to do with interest rates. The inversion of the yield curve, coupled with the Federal Reserve reversing course from monetary tightening to loosening, is expected to negatively impact the company's net interest income for numerous quarters.
The other problem it's encountered is persistent cash outflows from index-based investment products. It's pretty evident that investors are concerned about the stock market right now, and that has the potential to impact how much fee revenue Bank of New York Mellon generates from the asset management side of the business.
As a whole, this looks to be just a small blip for an otherwise successful and established provider of dividend income. I'd expect Buffett to recoup this $339.1 million with ease over the long run, inclusive of dividends paid.
Image source: American Airlines.
American Airlines Group: $240.8 million in market value lost
Lastly, whereas most airlines have delivered modest gains in 2019, American Airlines Group (NASDAQ: AAL) has mostly been grounded. Shares of the major airline have declined by 18% year to date, which translates into a loss of almost $241 million for Berkshire Hathaway.
Similar to the other laggards listed here, it isn't just one thing costing Buffett and Berkshire Hathaway money. Rather, it's a myriad of problems. For instance, American Airlines has been contending with labor issues. The company noted a stark increase in cancellations and delays tied to maintenance write-ups in a couple of the cities it services, potentially signaling deliberate action on the part of mechanic unions to coerce contract negotiations, which have been ongoing for some time. American Airlines has also been impacted by the grounding of Boeing's 737 MAX.
Furthermore, American Airlines looks to be in far worse shape than its peers when it comes to the company's balance sheet. Even though lending rates have remained low -- and should stay that way with the yield curve inverting and the Fed now easing -- American Airlines is lugging around an unsightly $34.8 billion in debt, or more than $29 billion in net debt. If a recession does present itself, it's unclear how well the company would fare.
Don't be surprised if Buffett decides to pare some of his position in American Airlines in the coming quarters.
10 stocks we like better than Berkshire Hathaway (B shares)
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (B shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Sean Williams owns shares of Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines Group: $240.8 million in market value lost Lastly, whereas most airlines have delivered modest gains in 2019, American Airlines Group (NASDAQ: AAL) has mostly been grounded. Teva has been a mess for the better part of two years now, having contended with a bribery scandal, the departure of top-level executives, the loss of exclusivity on its top-selling brand-name drug Copaxone for multiple sclerosis, and generic-drug price weakness. The inversion of the yield curve, coupled with the Federal Reserve reversing course from monetary tightening to loosening, is expected to negatively impact the company's net interest income for numerous quarters.
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American Airlines Group: $240.8 million in market value lost Lastly, whereas most airlines have delivered modest gains in 2019, American Airlines Group (NASDAQ: AAL) has mostly been grounded. Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting. Teva Pharmaceutical Industries: $368.5 million in market value lost While Kraft Heinz is Berkshire's monetary loser, brand-name and generic-drug developer Teva Pharmaceutical Industries (NYSE: TEVA) is the company's biggest percentage loser, with 55.3% of its market value being wiped away through August.
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American Airlines Group: $240.8 million in market value lost Lastly, whereas most airlines have delivered modest gains in 2019, American Airlines Group (NASDAQ: AAL) has mostly been grounded. Kraft Heinz: $5.13 billion in market value lost There's no question that the disaster du jour for Buffett in 2019 has been the utter collapse of food and beverage company Kraft Heinz (NASDAQ: KHC), which is down almost 41% through August. Teva Pharmaceutical Industries: $368.5 million in market value lost While Kraft Heinz is Berkshire's monetary loser, brand-name and generic-drug developer Teva Pharmaceutical Industries (NYSE: TEVA) is the company's biggest percentage loser, with 55.3% of its market value being wiped away through August.
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American Airlines Group: $240.8 million in market value lost Lastly, whereas most airlines have delivered modest gains in 2019, American Airlines Group (NASDAQ: AAL) has mostly been grounded. The problem with being such a large shareholder is that there isn't a good way to pare down Berkshire's stake without adversely impacting Kraft Heinz's stock. Teva Pharmaceutical Industries: $368.5 million in market value lost While Kraft Heinz is Berkshire's monetary loser, brand-name and generic-drug developer Teva Pharmaceutical Industries (NYSE: TEVA) is the company's biggest percentage loser, with 55.3% of its market value being wiped away through August.
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6353.0
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2019-09-03 00:00:00 UTC
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Stock Market News: Boeing Faces New Delays; Bitcoin ETF Coming
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https://www.nasdaq.com/articles/stock-market-news%3A-boeing-faces-new-delays-bitcoin-etf-coming-2019-09-03
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Tuesday morning brought a holiday hangover to the stock market, with significant losses to start the shortened week on Wall Street. Concerns about new tariffs that took effect over the weekend continue to hurt sentiment, and fears about past seasonal trends that have included substantial sell-offs in the months of September and October aren't helping investors feel more confident. As of 10:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 382 points to 26,021. The S&P 500 (SNPINDEX: ^GSPC) fell 29 points to 2,898, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) declined 84 points to 7,878.
Hurting the Dow this morning was Boeing (NYSE: BA), which saw its stock lose ground amid more bad news for the beleaguered aircraft manufacturer. Meanwhile, on the cryptocurrency front, a long-awaited announcement concerning a possible exchange-traded fund for investing in bitcoin could open up the market to a new group of institutional investors -- but not necessarily to individuals.
More 737 MAX delays for Boeing
Shares of Boeing were down 3% after the aerospace giant reportedly ran into more resistance concerning the grounding of its 737 MAX aircraft lines. Boeing has been working with federal regulators to get approval to get the planes flying again, but according to The Wall Street Journal, those talks aren't going well. Many fear that the tension could lead to an extended delay in the 737 MAX's return to service at least into early 2020.
Image source: Boeing.
Already, Boeing's customers have had to deal with the complications stemming from the grounding. American Airlines Group (NASDAQ: AAL) and United Continental Holdings (NASDAQ: UAL) recently canceled their planned 737 MAX flights through early to mid-December, taking the key Thanksgiving travel season off the table but still leaving open the hope that the planes might be available for the Christmas and New Year's holidays.
Boeing also faces the prospect of seeing customers start to shuffle orders. Rival Airbus has seen its business pick up as a result of Boeing's woes, and that trend could continue if the 737 MAX stays grounded indefinitely. It takes a long time for order shuffling to result in actual delivery changes, but investors have counted on Boeing being able to get the 737 MAX back in the air quickly to regain customer confidence. If that doesn't happen, then further declines in the stock could lie ahead.
Creating a bitcoin ETF
Bitcoin prices were up about 3% as cryptocurrency investors responded to news that an ETF granting access to the bitcoin market will open soon. Yet for those individuals who had hoped to take advantage, there'll be a longer wait.
ETF providers VanEck Securities and SolidX Management announced that they would make shares of their VanEck SolidX Bitcoin Trust available to a select set of investors on Thursday. However, the companies expect to open the ETF using a rule from the U.S. Securities and Exchange Commission that allows for certain offerings to avoid the extensive regulatory requirements that have prevented bitcoin ETFs from coming onto the market before now.
Under that rule, VanEck and SolidX will do a private placement of bitcoin ETF shares to qualified institutional buyers. That will allow investment without going through the SEC registration process. Unfortunately, it also means that ordinary investors won't have access to shares of VanEck SolidX Bitcoin Trust.
Bitcoin's rise in 2019 has been impressive, and it's gotten a lot more investors interested in cryptocurrencies again. Yet at least for now, the ease of investing in bitcoin through an ETF still won't be available to individual investors -- even if some hope that VanEck and SolidX's move could push things in the right direction in the future.
10 stocks we like better than Boeing
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Boeing wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Dan Caplinger owns shares of Boeing. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines Group (NASDAQ: AAL) and United Continental Holdings (NASDAQ: UAL) recently canceled their planned 737 MAX flights through early to mid-December, taking the key Thanksgiving travel season off the table but still leaving open the hope that the planes might be available for the Christmas and New Year's holidays. Concerns about new tariffs that took effect over the weekend continue to hurt sentiment, and fears about past seasonal trends that have included substantial sell-offs in the months of September and October aren't helping investors feel more confident. Meanwhile, on the cryptocurrency front, a long-awaited announcement concerning a possible exchange-traded fund for investing in bitcoin could open up the market to a new group of institutional investors -- but not necessarily to individuals.
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American Airlines Group (NASDAQ: AAL) and United Continental Holdings (NASDAQ: UAL) recently canceled their planned 737 MAX flights through early to mid-December, taking the key Thanksgiving travel season off the table but still leaving open the hope that the planes might be available for the Christmas and New Year's holidays. Meanwhile, on the cryptocurrency front, a long-awaited announcement concerning a possible exchange-traded fund for investing in bitcoin could open up the market to a new group of institutional investors -- but not necessarily to individuals. Unfortunately, it also means that ordinary investors won't have access to shares of VanEck SolidX Bitcoin Trust.
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American Airlines Group (NASDAQ: AAL) and United Continental Holdings (NASDAQ: UAL) recently canceled their planned 737 MAX flights through early to mid-December, taking the key Thanksgiving travel season off the table but still leaving open the hope that the planes might be available for the Christmas and New Year's holidays. More 737 MAX delays for Boeing Shares of Boeing were down 3% after the aerospace giant reportedly ran into more resistance concerning the grounding of its 737 MAX aircraft lines. Creating a bitcoin ETF Bitcoin prices were up about 3% as cryptocurrency investors responded to news that an ETF granting access to the bitcoin market will open soon.
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American Airlines Group (NASDAQ: AAL) and United Continental Holdings (NASDAQ: UAL) recently canceled their planned 737 MAX flights through early to mid-December, taking the key Thanksgiving travel season off the table but still leaving open the hope that the planes might be available for the Christmas and New Year's holidays. More 737 MAX delays for Boeing Shares of Boeing were down 3% after the aerospace giant reportedly ran into more resistance concerning the grounding of its 737 MAX aircraft lines. Creating a bitcoin ETF Bitcoin prices were up about 3% as cryptocurrency investors responded to news that an ETF granting access to the bitcoin market will open soon.
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6354.0
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2019-08-31 00:00:00 UTC
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Where Will Southwest Airlines Be in 10 Years?
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https://www.nasdaq.com/articles/where-will-southwest-airlines-be-in-10-years-2019-08-31
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Southwest Airlines (NYSE: LUV) has been a rewarding investment for investors. A $1,000 investment made in 1990 with dividends reinvested would be worth $54,000. Those gains were driven by Southwest's strategy of keeping operating costs as low as possible, pass the savings on to the customer with low fares, and offer a little in-flight hospitality.
Even with competitors starting to come on strong in recent years, Southwest delivered a record year in 2018. Revenue hit an all-time high of $22 billion, and annual profit also set a record at $2.4 billion.
So far, 2019 has had its ups and downs. The highlight has been the launch of the new service to Hawaii, with the low point being the delays in getting the new Boeing 737 MAX 8 in the air.
Beyond the short term, there is much opportunity for Southwest to remain a good growth stock. Here's a look of what's on the company's growth agenda and how it can stay ahead of the competition.
IMAGE SOURCE: SOUTHWEST AIRLINES.
First stop is Hawaii
Southwest spent the past few decades expanding its coverage from a regional focus to nationwide. It's now the largest domestic airline, connecting 101 cities across 40 states.
To keep growing, Southwest has started to expand its routing outside the continental U.S., which comprised 95% of available seat miles (ASM) in 2018. Currently, flights to Mexico, the Caribbean, and Central America represent 5% of total ASM. Over the next 10 years, look for Southwest to expand its routing well beyond the continental U.S.
Flights to Hawaii just kicked off earlier this year, with flights from Oakland and San Jose going to Honolulu, Kona, and Kahului. The $99 fare for flights between Sacramento and Hawaii starting in January 2020 have already sold out, so this should be a popular service. Southwest plans to expand the service with additional connections between California and Hawaii next year.
Hawaii will be the primary focus of management's expansion strategy through 2020, but the company has huge ambitions to expand internationally.
Next stop: South America?
Southwest has been the most profitable airline over the last half-century. It's the only major airline that hasn't filed for bankruptcy. Southwest achieved this remarkable feat in a cutthroat industry by doing things differently than its peers.
The company sticks to short routes and flies one type of aircraft (the Boeing 737). Also, while its competitors employ what's known as the hub-and-spoke routing system, Southwest uses a point-to-point routing structure. There are other nuances to the business model, but all together, these characteristics have helped Southwest maintain high employee productivity and better cost efficiency than its competitors.
Some investors may wonder if expanding internationally will be as profitable as expanding domestically since Southwest has outperformed the industry since the 1970s by focusing on shorter routes.
The interesting thing about Southwest's growth over the years is that the return on invested capital has increased as it has continued to expand, including adding international destinations. This is consistent with the company's DNA to allocate capital to maximize margins and returns for shareholders over the long haul.
LUV return on invested capital (TTM). Data by YCharts.
Looking beyond Hawaii, the next destination on the flight schedule is likely Latin America, where Southwest already has routes with 15 airports in the region, including to Mexico and the Caribbean. Given that Latin America has a population about twice the size of the U.S., this could present a greater opportunity than the phenomenal growth Southwest has experienced over the last 50 years.
Sticking to its guns
Moving forward, Southwest will have to double down on execution. Other airlines are starting to copy parts of its strategy by lowering costs and offering low ticket prices to compete more aggressively.
Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL) have increased their profitability significantly over the last 10 years. But as iron sharpens iron, these competitors have pushed Southwest to become even more efficient along the way, and management is committed to maintaining the company's cost advantage.
As Southwest expands over the next decade, the effort to continually improve cost efficiency and margins, which have made it the strongest airline financially, won't change. Management is currently going through a multiyear process to modernize the fleet with aircraft that have higher seating capacity, such as the Boeing MAX. This will increase revenue per ASM, which is intended to spread more revenue over operating costs to improve margins.
It's also optimizing routes, with an eye on the details, such as flying the routes with the best tailwind to lower fuel costs. Southwest is also implementing a new reservation system that is expected to add $500 million of incremental pre-tax profit by the end of 2020.
Southwest stock is a buy
Southwest has managed to reinvest in the business while distributing most of its free cash flow to shareholders in the form of share repurchases and dividends. The company just increased the quarterly dividend by 12.5%, which brings the forward dividend yield to 1.43%.
The near-term hiccup with the Boeing MAX delay is allowing investors to buy the stock at a significant discount right now. Currently, the forward price-to-earnings ratio is 9.8 times next year's earnings estimate.
The combination of international expansion and a cheap valuation makes Southwest Airlines a compelling stock to buy and hold for the next decade. By 2030, Southwest should be generating higher revenue and profits, and that should translate to a satisfactory return for shareholders.
10 stocks we like better than Southwest Airlines
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Southwest Airlines wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
John Ballard owns shares of Southwest Airlines. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL) have increased their profitability significantly over the last 10 years. The interesting thing about Southwest's growth over the years is that the return on invested capital has increased as it has continued to expand, including adding international destinations. As Southwest expands over the next decade, the effort to continually improve cost efficiency and margins, which have made it the strongest airline financially, won't change.
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Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL) have increased their profitability significantly over the last 10 years. The interesting thing about Southwest's growth over the years is that the return on invested capital has increased as it has continued to expand, including adding international destinations. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines.
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Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL) have increased their profitability significantly over the last 10 years. Over the next 10 years, look for Southwest to expand its routing well beyond the continental U.S. Flights to Hawaii just kicked off earlier this year, with flights from Oakland and San Jose going to Honolulu, Kona, and Kahului. Southwest stock is a buy Southwest has managed to reinvest in the business while distributing most of its free cash flow to shareholders in the form of share repurchases and dividends.
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Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL) have increased their profitability significantly over the last 10 years. Southwest plans to expand the service with additional connections between California and Hawaii next year. Some investors may wonder if expanding internationally will be as profitable as expanding domestically since Southwest has outperformed the industry since the 1970s by focusing on shorter routes.
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6355.0
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2019-08-28 00:00:00 UTC
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Insiders Buy the Holdings of VOE ETF
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AAL
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https://www.nasdaq.com/articles/insiders-buy-the-holdings-of-voe-etf-2019-08-28
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nan
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nan
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A look at the weighted underlying holdings of the Vanguard Mid-Cap Value ETF (VOE) shows an impressive 10.1% of holdings on a weighted basis have experienced insider buying within the past six months.
American Airlines Group Inc (Symbol: AAL), which makes up 0.50% of the Vanguard Mid-Cap Value ETF (VOE), has seen 8 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The ETF holds a total of $91,821,049 worth of AAL, making it the #87 largest holding. The table below details the recent insider buying activity observed at AAL:
AAL — last trade: $24.45 — Recent Insider Buys:
And Dish Network Corporation - Class A (Symbol: DISH), the #132 largest holding among components of the Vanguard Mid-Cap Value ETF (VOE), shows 2 directors and officers as recently filing Form 4's indicating purchases. The ETF holds $65,256,652 worth of DISH, which represents approximately 0.35% of the ETF's total assets at last check. The recent insider buying activity observed at DISH is detailed in the table below:
DISH — last trade: $32.37 — Recent Insider Buys:
10 ETFs With Stocks That Insiders Are Buying »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines Group Inc (Symbol: AAL), which makes up 0.50% of the Vanguard Mid-Cap Value ETF (VOE), has seen 8 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The table below details the recent insider buying activity observed at AAL: AAL — last trade: $24.45 — Recent Insider Buys: And Dish Network Corporation - Class A (Symbol: DISH), the #132 largest holding among components of the Vanguard Mid-Cap Value ETF (VOE), shows 2 directors and officers as recently filing Form 4's indicating purchases. The ETF holds a total of $91,821,049 worth of AAL, making it the #87 largest holding.
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American Airlines Group Inc (Symbol: AAL), which makes up 0.50% of the Vanguard Mid-Cap Value ETF (VOE), has seen 8 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The table below details the recent insider buying activity observed at AAL: AAL — last trade: $24.45 — Recent Insider Buys: And Dish Network Corporation - Class A (Symbol: DISH), the #132 largest holding among components of the Vanguard Mid-Cap Value ETF (VOE), shows 2 directors and officers as recently filing Form 4's indicating purchases. The ETF holds a total of $91,821,049 worth of AAL, making it the #87 largest holding.
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The table below details the recent insider buying activity observed at AAL: AAL — last trade: $24.45 — Recent Insider Buys: And Dish Network Corporation - Class A (Symbol: DISH), the #132 largest holding among components of the Vanguard Mid-Cap Value ETF (VOE), shows 2 directors and officers as recently filing Form 4's indicating purchases. American Airlines Group Inc (Symbol: AAL), which makes up 0.50% of the Vanguard Mid-Cap Value ETF (VOE), has seen 8 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The ETF holds a total of $91,821,049 worth of AAL, making it the #87 largest holding.
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American Airlines Group Inc (Symbol: AAL), which makes up 0.50% of the Vanguard Mid-Cap Value ETF (VOE), has seen 8 directors and officers purchase shares in the past six months, according to the recent Form 4 data. The ETF holds a total of $91,821,049 worth of AAL, making it the #87 largest holding. The table below details the recent insider buying activity observed at AAL: AAL — last trade: $24.45 — Recent Insider Buys: And Dish Network Corporation - Class A (Symbol: DISH), the #132 largest holding among components of the Vanguard Mid-Cap Value ETF (VOE), shows 2 directors and officers as recently filing Form 4's indicating purchases.
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6356.0
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2019-08-22 00:00:00 UTC
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Is Copa Holdings Overvalued?
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AAL
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https://www.nasdaq.com/articles/is-copa-holdings-overvalued-2019-08-22
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nan
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nan
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Maybe it seems disingenuous to ask if Copa Holdings (NYSE: CPA), which has a market capitalization of $4.4 billion and trades at just 13 times forward earnings, is overvalued, given that the S&P MidCap 400 Index currently sits at a forward PE ratio of 15.3. But if we place Copa's current market pricing in the context of the larger airline industry, the question gains some relevance:
CPA PE Ratio (Forward) data by YCharts.
In a cross-section of legacy airlines, low-cost carriers, and ultra-low-cost carriers, Copa stands out for market pricing that is substantially higher than the forward PE ratio of 8.1 averaged by the rest of the group in the chart above.
Copa's shares have appreciated by 21% over the last 12 months, despite a plethora of industry headwinds. Most visible of these issues is the grounding of Boeing's 737 MAX airplane, which continues to disrupt airlines' profits and capacity planning. American Airlines (NASDAQ: AAL) reported in July that MAX groundings cost it $175 million in profits in the second quarter, effectively reducing its operating income by 17%. Southwest (NYSE: LUV), another carrier with significant investments in the MAX, relayed in its own second-quarter report that it's revamped its estimated year-over-year capacity outlook in 2019 in terms of available seat miles (ASMs), from 5% growth to a contraction of 1% to 2%.
Copa's exposure to the MAX grounding isn't insignificant, but it's manageable. The organization currently holds 6 MAX aircraft in its fleet of 104 planes and is awaiting delivery on 7 additional aircraft. Taking the MAX out of service reduced Copa's capacity in ASMs by 4.3% in the second quarter, yet revenue passenger miles (RPMs) only slipped by 2.5%. Copa's load factor (a measure of how fully flights are loaded) actually increased 160 basis points year over year to 85.1%, a sign of demand across its broader fleet and flight routes in general.
Investor angst over near-term economic growth is also compressing the stock charts of U.S. and global carriers. The World Bank forecasts that global gross domestic product (GDP) will decline from 3% in 2018 to 2.6% this year. Fears of a potential U.S. recession are also diminishing the outlook for the airline industry.
Yet Copa's geographical base of Latin America is benefiting from airline passenger traffic growth in both commercial and leisure segments, despite economic volatility in the region. Indeed, in the second quarter, Copa saw a strong demand environment and was able to exercise a bit of pricing power while also growing ancillary revenue sales. Yields (average fare per passenger mile) increased 4.1% year over year. The airline combined this with tight cost control, despite an unavoidable 5.7% increase in costs per available seat miles (CASM), excluding fuel, related to the MAX grounding. Even with the MAX cost burden, total year-over-year operating expense decreased by 2% in the second quarter. When combined with a 4% revenue improvement, the cost control resulted in a 37% increase in operating income over the prior-year quarter.
Image source: Getty Images.
In addition to a talent for wringing out profit growth despite external headwinds, at least two other factors are supporting investors' willingness to pay a premium for Copa versus nearly all other U.S.-based competitors. First, the carrier tends to sustain demand through its sheer reliability. Digital air travel analytics provider OAG named Copa the world's most punctual airline this year, with an average on-time performance (OTP) index of nearly 90%. Qualitative statistics like this tend to manifest over time in a company's financial performance.
Second, Copa's moderate debt load and healthy annual operating margin of nearly 13% are conducive to generous cash flow, and the company rewards investors with a dividend yield that exceeds those of its rivals that also offer a regular payout to investors:
CPA Dividend Yield (TTM) data by YCharts.
In an environment of steadily declining interest rates, stable dividend stocks with attractive income potential are starting to stand out. Even after its stock price ascent over the last year, Copa still sports a near-3% dividend yield. Add shareholder return attractiveness to the many other positive characteristics of this carrier, and it's clear that Copa may be closer to being fairly valued than undervalued.
10 stocks we like better than Copa Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Copa Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Asit Sharma has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Southwest Airlines. The Motley Fool recommends Copa Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (NASDAQ: AAL) reported in July that MAX groundings cost it $175 million in profits in the second quarter, effectively reducing its operating income by 17%. But if we place Copa's current market pricing in the context of the larger airline industry, the question gains some relevance: CPA PE Ratio (Forward) data by YCharts. Southwest (NYSE: LUV), another carrier with significant investments in the MAX, relayed in its own second-quarter report that it's revamped its estimated year-over-year capacity outlook in 2019 in terms of available seat miles (ASMs), from 5% growth to a contraction of 1% to 2%.
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American Airlines (NASDAQ: AAL) reported in July that MAX groundings cost it $175 million in profits in the second quarter, effectively reducing its operating income by 17%. But if we place Copa's current market pricing in the context of the larger airline industry, the question gains some relevance: CPA PE Ratio (Forward) data by YCharts. The Motley Fool recommends Copa Holdings.
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American Airlines (NASDAQ: AAL) reported in July that MAX groundings cost it $175 million in profits in the second quarter, effectively reducing its operating income by 17%. In a cross-section of legacy airlines, low-cost carriers, and ultra-low-cost carriers, Copa stands out for market pricing that is substantially higher than the forward PE ratio of 8.1 averaged by the rest of the group in the chart above. Second, Copa's moderate debt load and healthy annual operating margin of nearly 13% are conducive to generous cash flow, and the company rewards investors with a dividend yield that exceeds those of its rivals that also offer a regular payout to investors: CPA Dividend Yield (TTM) data by YCharts.
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American Airlines (NASDAQ: AAL) reported in July that MAX groundings cost it $175 million in profits in the second quarter, effectively reducing its operating income by 17%. In a cross-section of legacy airlines, low-cost carriers, and ultra-low-cost carriers, Copa stands out for market pricing that is substantially higher than the forward PE ratio of 8.1 averaged by the rest of the group in the chart above. Yields (average fare per passenger mile) increased 4.1% year over year.
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6357.0
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2019-08-19 00:00:00 UTC
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10 Undervalued Stocks With Breakout Potential
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AAL
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https://www.nasdaq.com/articles/10-undervalued-stocks-with-breakout-potential-2019-08-19
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nan
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nan
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The stock market has rushed to all-time highs in 2019 and — despite recent trade-inspired turbulence — is still on pace to have one of its best years in recent memory. But not all stocks have joined in on the rally. Instead, a handful of stocks have actually had a rough 2019, dropping big year-to-date into historically undervalued territory — even while the market trades at a decade-high valuation.
Some of these undervalued stocks are undervalued for a reason, and should be avoided for the foreseeable future. The fundamentals simply don’t warrant a turnaround.
But some of these undervalued stocks look primed for a breakout. That is, some of them appear unreasonably undervalued, with big catalysts on the horizon — a combination which paves a tangible pathway for big upside.
With that in mind, let’s take a look at 10 undervalued stocks with breakout potential in the back-half of 2019.
Foot Locker (FL)
Source: Shutterstock
The Valuation: Because the athletic apparel sector sources a lot of production from China, many athletic apparel stocks find themselves at the epicenter of the U.S.-China trade war. Foot Locker (NYSE:) is no exception. The company’s margins have come under significant pressure thanks to tariffs, and in response, investors have sold off FL stock to an anemic 8-times forward earnings multiple, versus a five-year-average forward multiple north of 12, a consumer discretionary sector average multiple north of 20, and a footwear sector average multiple north of 28.
The Breakout Catalyst: Foot Locker’s demand trends are healthy. Last quarter, Foot Locker reported nearly 5% comparable sales growth. Thus, the whole problem here is the trade war. If the trade war cools, FL stock will presumably rally in a big way. It increasingly appears that this will happen. U.S. President Donald Trump has delayed the next round of tariffs, while China is coming under intense internal pressure with the Hong Kong riots. Consequently, it appears both sides want to de-escalate trade tensions. Such a de-escalation should couple with strong demand drivers at Foot Locker to propel a breakout rally in FL stock into the end of 2019.
CVS (CVS)
Source: Shutterstock
The Valuation: Pharmacy giant CVS (NYSE:) is in the midst of multi-year downtrend thanks to adverse consumption and legislation trends, the sum of which have weighed on revenues, profits, and investor sentiment. Net net, CVS stock today trades at a depressed 8.5-times forward earnings multiple, versus a five-year-average forward multiple of over 13.
The Breakout Catalyst: Both consumption and legislation trends are finally progressing in the right direction for CVS. On the consumption side, CVS reported a robust 4.2% increase in same store sales last quarter, including an impressive 2.9% increase in front store sales. This is mostly because, thanks to the Aetna acquisition, CVS is pushing forward on a promising local healthcare plan. Meanwhile, on the legislation side, the White House scrapped a PBM rebate program which would’ve been disastrous for CVS. Broadly, then, it increasingly appears that CVS stock is the early innings of massive multi-quarter rebound.
AT&T (T)
Source: Shutterstock
The Valuation: Telecom-giant AT&T (NYSE:) has featured a persistently cheap stock for the past several years. T stock trades at just 10-times forward earnings today and has averaged an 11-times forward earnings multiple over the past five years. In other words, T stock has been stubbornly cheap forever.
The Breakout Catalyst: AT&T stock has been stubbornly cheap forever because the company has been staring at huge cord-cutting headwinds. Much like Disney (NYSE:) has done over the past few months, though, AT&T is prepared to shake off those cord-cutting headwinds over the next few months thanks to the launch of a new content-packed streaming service in HBO Max. At the same time, the forthcoming 5G wave promises to provide a big boost to the company’s wireless business. Thus, over the next twelve months, two big catalysts — a full blown pivot into the streaming space and the mainstream roll-out of 5G — will finally “wake up” T stock and spark a big breakout rally in this stubbornly cheap stock.
American Airlines (AAL)
Source: Shutterstock
The Valuation: Airline stocks have been hit hard over the past twenty months, dragged down by rising oil prices in early 2018, slowing global air travel demand in late 2018 and the 737 MAX crisis in 2019. American Airlines (NYSE:) has been no exception to the trend. If anything, it’s been an out-sized loser, with AAL stock down more than 50% since early 2018. At present, given the the airline industry’s sizable headwinds, AAL stock trades at just 5.5-times forward earnings, versus an airline average forward earnings multiple north of 8.
The Breakout Catalyst: The fundamentals underlying the airline industry are positioned to meaningfully improve over the next few quarters. Oil prices will drop, as supply continues to outstrip demand in a slowing global manufacturing economy. Air travel demand will remain robust, as the global consumer economy remains on solid footing. 737 MAX planes will get back into the air by early 2020. Net net, by early 2020, top and bottom line trends across the whole airline industry should meaningfully improve, and that improvement should lead to a breakout recovery rally in depressed and beaten-up AAL stock.
AMC Entertainment (AMC)
Source: Shutterstock
The Valuation: It’s been a rough year for movie theater operator AMC Entertainment (NYSE:), as sluggish box office trends in the first half of 2019 have breathed life back into the thesis that movie theaters are going extinct. As that thesis has gained traction, AMC stock has plunged to dirt cheap levels. Today, AMC stock trades at less than 0.3-times trailing sales. Three years ago, the trailing sales multiple was above 1.
The Breakout Catalyst: box office trends showed meaningful improvement from the January through June trend. August is off to a good start, too. The outlook for the rest of 2019 is also favorable, headlined by a second Frozen movie and the final installment in the latest Star Wars trilogy. As box office trends continue to improve into the end of the year, the “movie theaters are dying” thesis will start lose steam. As that thesis drowns out, investor sentiment will improve, and the stock will meaningfully recover.
Ford (F)
Source: Shutterstock
The Valuation: After several years of red hot growth, the global auto market is cooling off. In that cooling market, U.S. auto giant Ford (NYSE:) is losing share. The company’s margins are also coming under intense pressure thanks to U.S.-China tariffs. Net net, revenue, margin and profit trends at Ford have been depressed for some time. This has led to an equally depressed Ford stock, which presently trades at just 7.2-times forward earnings.
The Breakout Catalyst: The recent surge of in the U.S. economy in the first half of 2019, should have a positive impact on auto market demand in the back half of 2019. Continued healthy labor conditions should similarly help reinvigorate auto demand. At the same time, Ford is aggressively reshaping its car portfolio to be more electric and thereby, more relevant. Tariffs are also being pushed back, and the trade war looks like it will cool down from here. Putting all that together, then, Ford’s underlying fundamentals are positioned to improve significantly over the next few quarters. As they do, Ford stock should bounce back from today’s depressed levels.
Intel (INTC)
Source: JHVEPhoto / Shutterstock.com
The Valuation: When it comes to playing the next-gen AI and data revolution, chipmaker Intel (NASDAQ:) offers investors arguably the cheapest way to do it. The company has exposure to all of those secular growth end markets (self driving, machine learning, hyper-scale data centers, so on and so forth). Yet, INTC stock trades at just 11-times forward earnings, mostly because Intel is a slow growth player in those market that is rapidly losing share to faster growing rivals.
The Breakout Catalyst: INTC stock could charge higher for three big reasons. First, Intel’s (and more are coming soon), so the company may finally be able to win share back from Advanced Micro Devices (NASDAQ:). Second, the trade war appears to be cooling, and that’s big for both Intel’s demand and margins. Third, there are rumors out there that hyper-scale data center spend – which has taken step back thus far in 2019 – is finally starting to ramp back up. Those three catalysts together could push INTC up towards $60 within the next few quarters.
IBM (IBM)
Source: Shutterstock
The Valuation: Much like shares of AT&T, shares of blue chip tech giant IBM (NYSE:) have been stubbornly cheap for the past several years as the company has dealt with sluggish revenue, margin, and profit growth trends. Investors keep waiting for things to turn around. They never do. As such, IBM stock has been depressed for a long time.
The Breakout Catalyst: IBM’s sluggish growth trends could finally turn around over the next few quarters, thanks to the integration of Red Hat. Last year, IBM announced its intention to acquire hybrid cloud company Red Hat. That acquisition just closed. Importantly, Red Hat is growing revenues at a much faster rate than IBM, and operates at higher gross margins. Red Hat also opens up IBM’s cloud business to Red Hat’s long list of hybrid cloud customers. Thus, the integration of Red Hat into IBM’s business will provide a meaningful lift to IBM’s revenue and profit growth trends. That lift should breathe life back into depressed IBM stock.
Skechers (SKX)
The Valuation: As mentioned earlier, the athletic apparel sector finds its square in the middle of the U.S.-China trade war. Athletic footwear brand Skechers (NYSE:) is no exception. Consequently, as trade tensions have heated up in August, SKX stock has retreated. The stock now trades at less than 15-times forward earnings, versus an apparel retail sector average multiple of nearly 18 and footwear sector average multiple of nearly 30.
The Breakout Catalyst: Prior to trade tensions heating up, Skechers reported blowout second quarter numbers which comprised big revenue growth, big margin expansion, and big profit growth. SKX stock soared in response to that print. The stock has since given up nearly all of those gains because of Trump’s proposed new tariffs. But, those new tariffs are being edited and delayed — and may never actually come into existence. As such, as fear surrounding those new tariffs eases and disappears over the next few months, SKX stock should bounce back to its post-earnings highs.
Kohl’s (KSS)
Source: Sundry Photography/Shutterstock.com
The Valuation: The physical retail sector has been killed over the past several quarters, mostly because a disappointing holiday 2018 season has flowed into continued sluggish sales trends through the first half of 2019. Kohl’s (NYSE:) — one of the largest physical retailers in the U.S. — has not been immune to the sell-off. In 2019, Kohl’s comparable sales have dropped into negative territory, while margins have retreated. In response, KSS stock has dropped big, and now trades at a dirt cheap 9.6-times forward earnings multiple (versus a five-year-average forward earnings multiple of 12-plus).
The Breakout Catalyst: The macro retail backdrop will meaningfully improve over the next few quarters, thanks to: 1) proactive fiscal stimulus in the first half of 2019, 2) continued favorable U.S. labor conditions, 3) plunging interest rates and 4) de-escalating trade tensions. Against that improving retail backdrop, Kohl’s growth trends should bounce back because this company has a unique value prop (off price and off mall) and winning omni-channel growth strategy based on multiple Amazon (NASDAQ:) partnerships. As such, by the end of 2019, Kohl’s comps should inflect back into positive territory, while margins should march higher. If so, KSS stock should bounce back in a big way from today’s depressed valuation levels.
As of this writing, Luke Lango was long FL, CVS, T, DIS, AMC, F, INTC, and AMZN.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (AAL) Source: Shutterstock The Valuation: Airline stocks have been hit hard over the past twenty months, dragged down by rising oil prices in early 2018, slowing global air travel demand in late 2018 and the 737 MAX crisis in 2019. If anything, it’s been an out-sized loser, with AAL stock down more than 50% since early 2018. At present, given the the airline industry’s sizable headwinds, AAL stock trades at just 5.5-times forward earnings, versus an airline average forward earnings multiple north of 8.
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American Airlines (AAL) Source: Shutterstock The Valuation: Airline stocks have been hit hard over the past twenty months, dragged down by rising oil prices in early 2018, slowing global air travel demand in late 2018 and the 737 MAX crisis in 2019. If anything, it’s been an out-sized loser, with AAL stock down more than 50% since early 2018. At present, given the the airline industry’s sizable headwinds, AAL stock trades at just 5.5-times forward earnings, versus an airline average forward earnings multiple north of 8.
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American Airlines (AAL) Source: Shutterstock The Valuation: Airline stocks have been hit hard over the past twenty months, dragged down by rising oil prices in early 2018, slowing global air travel demand in late 2018 and the 737 MAX crisis in 2019. If anything, it’s been an out-sized loser, with AAL stock down more than 50% since early 2018. At present, given the the airline industry’s sizable headwinds, AAL stock trades at just 5.5-times forward earnings, versus an airline average forward earnings multiple north of 8.
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American Airlines (AAL) Source: Shutterstock The Valuation: Airline stocks have been hit hard over the past twenty months, dragged down by rising oil prices in early 2018, slowing global air travel demand in late 2018 and the 737 MAX crisis in 2019. If anything, it’s been an out-sized loser, with AAL stock down more than 50% since early 2018. At present, given the the airline industry’s sizable headwinds, AAL stock trades at just 5.5-times forward earnings, versus an airline average forward earnings multiple north of 8.
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6358.0
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2019-08-16 00:00:00 UTC
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Notable Friday Option Activity: AAL, LAMR, TGT
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AAL
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https://www.nasdaq.com/articles/notable-friday-option-activity%3A-aal-lamr-tgt-2019-08-16
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nan
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nan
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Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 39,381 contracts have traded so far, representing approximately 3.9 million underlying shares. That amounts to about 53.9% of AAL's average daily trading volume over the past month of 7.3 million shares. Especially high volume was seen for the $26 strike put option expiring September 20, 2019, with 3,151 contracts trading so far today, representing approximately 315,100 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $26 strike highlighted in orange:
Lamar Advertising Co (Symbol: LAMR) options are showing a volume of 1,781 contracts thus far today. That number of contracts represents approximately 178,100 underlying shares, working out to a sizeable 50.7% of LAMR's average daily trading volume over the past month, of 351,560 shares. Especially high volume was seen for the $70 strike put option expiring September 20, 2019, with 781 contracts trading so far today, representing approximately 78,100 underlying shares of LAMR. Below is a chart showing LAMR's trailing twelve month trading history, with the $70 strike highlighted in orange:
And Target Corp (Symbol: TGT) options are showing a volume of 24,526 contracts thus far today. That number of contracts represents approximately 2.5 million underlying shares, working out to a sizeable 50% of TGT's average daily trading volume over the past month, of 4.9 million shares. Particularly high volume was seen for the $90 strike put option expiring September 20, 2019, with 4,011 contracts trading so far today, representing approximately 401,100 underlying shares of TGT. Below is a chart showing TGT's trailing twelve month trading history, with the $90 strike highlighted in orange:
For the various different available expirations for AAL options, LAMR options, or TGT options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Especially high volume was seen for the $26 strike put option expiring September 20, 2019, with 3,151 contracts trading so far today, representing approximately 315,100 underlying shares of AAL. Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 39,381 contracts have traded so far, representing approximately 3.9 million underlying shares. That amounts to about 53.9% of AAL's average daily trading volume over the past month of 7.3 million shares.
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Below is a chart showing AAL's trailing twelve month trading history, with the $26 strike highlighted in orange: Lamar Advertising Co (Symbol: LAMR) options are showing a volume of 1,781 contracts thus far today. Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 39,381 contracts have traded so far, representing approximately 3.9 million underlying shares. That amounts to about 53.9% of AAL's average daily trading volume over the past month of 7.3 million shares.
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Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 39,381 contracts have traded so far, representing approximately 3.9 million underlying shares. Especially high volume was seen for the $26 strike put option expiring September 20, 2019, with 3,151 contracts trading so far today, representing approximately 315,100 underlying shares of AAL. That amounts to about 53.9% of AAL's average daily trading volume over the past month of 7.3 million shares.
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Below is a chart showing TGT's trailing twelve month trading history, with the $90 strike highlighted in orange: For the various different available expirations for AAL options, LAMR options, or TGT options, visit StockOptionsChannel.com. Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 39,381 contracts have traded so far, representing approximately 3.9 million underlying shares. That amounts to about 53.9% of AAL's average daily trading volume over the past month of 7.3 million shares.
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6359.0
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2019-08-14 00:00:00 UTC
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Why Shares of American Airlines Were Grounded on Wednesday
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AAL
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https://www.nasdaq.com/articles/why-shares-of-american-airlines-were-grounded-on-wednesday-2019-08-14
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nan
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nan
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What happened
Shares of American Airlines Group (NASDAQ: AAL) fell more than 5% on Wednesday, sinking to a multiyear low in the process. The airlines tend to trade in tandem, based on the price of oil and other factors, but American's fall Wednesday was much more severe than the drop in the share price of rivals including Southwest Airlines, Delta Air Lines, and United Airlines Holdings.
There were some headlines out today concerning American's ongoing labor issues, but the airline's issues with its mechanics are well-known and likely not responsible for the sell-off. Investors instead seem to be worried about the threat of a recession and wondering whether American will be able to fly through the potential turbulence on the horizon.
So what
The airlines, after a series of bankruptcy reoganizations earlier in the decade, have made progress in moving away from the boom-and-bust cycle that once haunted the industry and caused huge losses during recessions. The businesses have so improved that American CEO Doug Parker famously said in 2017, "I don't think we're ever going to lose money again," predicting profits in good times and in bad.
American shares are stuck on the ground. Image source: American Airlines.
That quote is front of mind today as the yield on a 10-year Treasury bond fell below the two-year rate, creating a so-called inverted yield curve that many investors believe is a signal that a recession is imminent. Whether a downturn is around the corner remains to be seen, but investors on Wednesday voted with their feet that American appears to be the major airline most vulnerable in a slowing economy.
The reason it's vulnerable, in a word, is debt. American has more than $34 billion in debt, compared to United's $20 billion, Delta's $17.4 billion, and Southwest's $4.6 billion. The good news for American is with the yield curve flat, the interest expense on that debt will remain low. The bad news is that should demand falter, investors are worried that American could struggle to manage its borrowings in a worst-case scenario.
Airline Debt-to-Assets (Quarterly) data by YCharts.
American has other potential issues heading into a possible recession, including a stubbornly high cost structure, pension liabilities, and continued labor unrest. It's also one of the airlines dealing with scheduling disruptions due to Boeing's 737 MAX issues. Add it all up, and on a day when a slowing economy was front of mind, investors hit the "eject" button.
Now what
It's worth noting that while American does have it's share of issues and is behind rivals such as Delta in terms of revamping operations, the sky isn't falling. American is arguably better positioned than rivals for weakness in Asia, thanks to cutbacks announced last year, and is in the early days of revamping its route network and pricing strategies to increase profitability. The airline expects capital expenditures (capex) spending to come down dramatically over the next few years, which will free up cash to attack its debt load.
It's going to take some time for American to reach its destination. But on a day dominated by panic selling, the American sell-off seems overdone. Even if a recession has arrived, there's not a lot to suggest that American is at risk of flying back into bankruptcy.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 5% on Wednesday, sinking to a multiyear low in the process. So what The airlines, after a series of bankruptcy reoganizations earlier in the decade, have made progress in moving away from the boom-and-bust cycle that once haunted the industry and caused huge losses during recessions. The businesses have so improved that American CEO Doug Parker famously said in 2017, "I don't think we're ever going to lose money again," predicting profits in good times and in bad.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 5% on Wednesday, sinking to a multiyear low in the process. The airlines tend to trade in tandem, based on the price of oil and other factors, but American's fall Wednesday was much more severe than the drop in the share price of rivals including Southwest Airlines, Delta Air Lines, and United Airlines Holdings. American has more than $34 billion in debt, compared to United's $20 billion, Delta's $17.4 billion, and Southwest's $4.6 billion.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 5% on Wednesday, sinking to a multiyear low in the process. The airlines tend to trade in tandem, based on the price of oil and other factors, but American's fall Wednesday was much more severe than the drop in the share price of rivals including Southwest Airlines, Delta Air Lines, and United Airlines Holdings. 10 stocks we like better than American Airlines Group When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen.
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What happened Shares of American Airlines Group (NASDAQ: AAL) fell more than 5% on Wednesday, sinking to a multiyear low in the process. There were some headlines out today concerning American's ongoing labor issues, but the airline's issues with its mechanics are well-known and likely not responsible for the sell-off. Investors instead seem to be worried about the threat of a recession and wondering whether American will be able to fly through the potential turbulence on the horizon.
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6360.0
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2019-08-14 00:00:00 UTC
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New 52-Week Low Could Prompt More Insider Buying At AAL
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AAL
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https://www.nasdaq.com/articles/new-52-week-low-could-prompt-more-insider-buying-at-aal-2019-08-14
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nan
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nan
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In trading on Wednesday, shares of American Airlines Group Inc (Symbol: AAL) touched a new 52-week low of $26.31/share. That's a $17.58 share price drop, or -40.05% decline from the 52-week high of $43.89 set back on 09/21/2018. Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for AAL that means the stock would have to gain 66.82% to get back to the 52-week high. For a move like that, American Airlines Group Inc would need fundamental strength at the business level.
Here's a rhetorical question: Who knows more about fundamentals at the business level than the company's own insiders? So let's take a look to see whether any company insiders were taking the other side of the trade as AAL shares were being sold down to this new 52-week low, focusing on the most recent trailing six month period. As summarized by the table below, AAL has seen 8 different instances of insiders buying over the past six months.
In the short run, while the new 52-week low suggests the stock is at the cheapest price and perhaps therefore the best bargain it has been over the last 52 weeks, the low print also means anyone who has purchased the stock over that timeframe is staring at an unrealized loss. Oftentimes, that factor drives a stock's technical analysis metrics by creating overhead resistance, with investors who bought higher now anxious to reverse their trade once they are back to breakeven. The chart below shows where AAL has traded over the past year, with the 50-day and 200-day moving averages included.
Time will tell whether the insider purchases foretell a future rebound for AAL shares, which are presently showing a last trade of $26.40/share, slightly above the new 52-week low.
Ten Bargains You Can Buy Cheaper Than The Insiders Did »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Wednesday, shares of American Airlines Group Inc (Symbol: AAL) touched a new 52-week low of $26.31/share. Time will tell whether the insider purchases foretell a future rebound for AAL shares, which are presently showing a last trade of $26.40/share, slightly above the new 52-week low. Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for AAL that means the stock would have to gain 66.82% to get back to the 52-week high.
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In trading on Wednesday, shares of American Airlines Group Inc (Symbol: AAL) touched a new 52-week low of $26.31/share. Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for AAL that means the stock would have to gain 66.82% to get back to the 52-week high. So let's take a look to see whether any company insiders were taking the other side of the trade as AAL shares were being sold down to this new 52-week low, focusing on the most recent trailing six month period.
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Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for AAL that means the stock would have to gain 66.82% to get back to the 52-week high. So let's take a look to see whether any company insiders were taking the other side of the trade as AAL shares were being sold down to this new 52-week low, focusing on the most recent trailing six month period. Time will tell whether the insider purchases foretell a future rebound for AAL shares, which are presently showing a last trade of $26.40/share, slightly above the new 52-week low.
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Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for AAL that means the stock would have to gain 66.82% to get back to the 52-week high. The chart below shows where AAL has traded over the past year, with the 50-day and 200-day moving averages included. In trading on Wednesday, shares of American Airlines Group Inc (Symbol: AAL) touched a new 52-week low of $26.31/share.
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6361.0
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2019-08-14 00:00:00 UTC
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Wednesday’s Vital Data: Amgen, American Airlines and Apple
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AAL
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https://www.nasdaq.com/articles/wednesdays-vital-data%3A-amgen-american-airlines-and-apple-2019-08-14
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nan
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nan
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The topsy-turvy ride for stock traders continues this morning with U.S. stock futures pointing toward a sizeable down gap at the open. Yesterday’s gains are being completely unwound.
Source: Shutterstock
Heading into the open, futures on the Dow Jones Industrial Average are down 1.46%, and S&P 500 futures are lower by 1.42%. Nasdaq-100 futures have lost 1.57%.
In the options pits, call volume spiked sharply yesterday underlying the excitement surrounding the market rally. Specifically, about 19.9 million calls and 17.5 million puts changed hands on the session.
The enthusiasm was felt at the CBOE as well, with the single-session equity put/call volume ratio falling to 0.66. Meanwhile, the 10-day moving average held its ground at 0.74. Based on the wickedness of today’s open, however, I suspect both metrics to end with bearish readings today.
Options traders came after calls throughout the session, boosting volumes in Amgen (NYSE:), American Airlines Group (NYSE:) and Apple (NASDAQ:).
Let’s take a closer look:
Amgen (AMGN)
The direction of Amgen shares reversed in a big way this week after the biotech behemoth won a patent dispute against Novartis (NYSE:). Over the past three sessions, AMGN stock has rocketed 12% higher on massive volume. The rally pushed shares back to last year’s highs, and they now stand a whisper from breaking out to record levels.
In the short run, AMGN is extended and deserving of a breather. Consolidation or a pullback will allow its moving averages to catch-up and make for a more sustainable uptrend. That said, any weakness should be viewed as a buying opportunity.
On the options trading front, traders went cuckoo for calls. Activity ballooned to 1,314% of the average daily volume, with 275,296 total contracts traded; 96% of the trading came from call options alone. The catalyst for such a groundswell in call demand is the company’s looming ex-dividend date. Amgen’s next quarterly payment of $1.45 will be paid out to shareholders of record and investors used call options to snatch-up short-term control of the stock to gain access to the payout.
Implied volatility has been falling this week and now sits at 24% or the 29th percentile of its one-year range. Premiums are baking in daily moves of $3.08 or 1.5%, so set your expectations accordingly.
American Airlines (AAL)
The news was light for American Airlines Group, but that didn’t prevent traders from swarming its options. In an otherwise ordinary day, we saw options activity jump to 270% of the average daily volume, with 107,237 total contracts traded. Calls slightly outpaced puts to claim 55% of the session’s sum.
Ever since last month’s earnings took the wind out of its sails, AAL stock has been declining. It has now lost 21% in three weeks and will soon test its 52-week low at $27.02. Of course, weakness isn’t new for AAL. It has been in a cyclical decline for two years and has already lost over 53% of its value. Until we see resistance levels breached, buyers should cast their lines elsewhere. There are much more attractive fish to catch.
Implied volatility remains, tucked near the middle of its 2019 range. It’s at 41% or the 31st percentile, and premiums are pricing in daily moves of 71 cents or 2.6%.
Apple (AAPL)
Apple stock led the charge during Tuesday’s roaring rally in the Nasdaq for one simple reason. It dodged Chinese tariffs for this year’s iPhones. if you want all the details.
Before we get too excited over yesterday’s jump, keep in mind the overnight whacking for stocks is taking a bite out of Apple’s gains. The stock is set to open down 2.4%. Time will tell if the positive news is enough to keep AAPL stock aloft while the rest of the market grapples with growing recession concerns.
The post-earnings slide found support at $192.50, so that’s the line in the sand to watch. If broken, this year’s ascent is in a heap of trouble. Until then, ignore the chop and focus on the bigger picture, which still points higher.
On the options trading front, traders favored calls throughout the day. Total activity swelled to 137% of the average daily volume, with 686,707 contracts traded. Calls added 59% to the day’s take.
With uncertainty easing, implied volatility sunk to 29% or the 35th percentile of its one-year range. That means traders are now pricing in daily movement of $3.87 or 1.9%.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released to learn how to defend your portfolio against market volatility.
More From InvestorPlace
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (AAL) The news was light for American Airlines Group, but that didn’t prevent traders from swarming its options. Ever since last month’s earnings took the wind out of its sails, AAL stock has been declining. Of course, weakness isn’t new for AAL.
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American Airlines (AAL) The news was light for American Airlines Group, but that didn’t prevent traders from swarming its options. Ever since last month’s earnings took the wind out of its sails, AAL stock has been declining. Of course, weakness isn’t new for AAL.
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American Airlines (AAL) The news was light for American Airlines Group, but that didn’t prevent traders from swarming its options. Ever since last month’s earnings took the wind out of its sails, AAL stock has been declining. Of course, weakness isn’t new for AAL.
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American Airlines (AAL) The news was light for American Airlines Group, but that didn’t prevent traders from swarming its options. Ever since last month’s earnings took the wind out of its sails, AAL stock has been declining. Of course, weakness isn’t new for AAL.
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6362.0
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2019-08-14 00:00:00 UTC
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The Collapse of American Airlines Stock Has Created an Opportunity
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AAL
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https://www.nasdaq.com/articles/the-collapse-of-american-airlines-stock-has-created-an-opportunity-2019-08-14
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nan
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nan
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Shares of American Airlines (NYSE:) have been under pressure ever since early 2018, as the airline has been hit by one headwind after the other. American Airlines stock dropped more than 50% from January 2018 to August 2019.
Source: Shutterstock
First, rising oil prices hit the company’s margins hard in early 2018. Then, recession fears and slowing global demand hurt AAL stock in late 2018.
Early this year – just as things were starting to get better for American Airlines – Boeing’(NYSE:) had massive problems with its MAX 737 plane. The subsequent grounding of those planes created under-capacity issues for American Airlines which have weighed on its margins and profits.
The last 20 months have been ugly for AAL stock. But there’s reason to believe that American Airlines stock is now a good opportunity for investors.
The headwinds which have hit AAL stock hard over the past 20 months will inevitably fade. That will probably happen soon. Oil prices should fall for the foreseeable future, thanks to rising supply and falling demand. Demand for air travel will remain strong, thanks to healthy global labor conditions. The 737’s difficulties will be solved, and those planes should start flying again by late 2019.
All in all, by the end of 2019, American Airlines could be benefiting from strong demand, low oil prices and full capacity. That will be a winning combination for American Airlines stock. Since those improvements aren’t priced into AAL stock today, American Airlines stock could be due for a big comeback rally between now and the end of the year.
Things Will Get Better for American Airlines
American Airlines stock has tumbled over the past 20 months because the outlook and optics surrounding the company have been consistently negative. Heading into the end of 2019, that should change tremendously.
Over the past 20 months, American Airlines has dealt with rising oil prices (which killed its margins in early 2018), slowing demand (which caused its revenue growth to decelerate in late 2018), and the grounding of the 737s (which pushed down its volumes and added cost pressure). Given that backdrop, it’s no wonder AAL stock has dropped over 50% since early 2018.
Over the next year, the outlook and optics of American Airlines will change for the better. Oil prices likely won’t rise meaningfully in the near-term. The oil market is being flooded with new supply. Oil supply outstripped oil demand by 900,000 barrels per day in the first half of 2019, according to . At the same time, the global economy is heading into a manufacturing recession, according to many experts, and that will inevitably weigh on oil demand. Thus, going forward, oil prices should drift lower.
Meanwhile, demand for airplane travel should remain robust. Younger consumers value experiences over products, and traveling is one of their most coveted experiences, creating a strong, non-cyclical tailwind for American Airlines. At the same time, labor conditions globally are very good, featuring low unemployment rates and rising wages. That means consumers have both the appetite and ability to travel, implying that airline demand should remain healthy for the foreseeable future.
Last, but not least, the MAX 737 groundings are just temporary. These planes will get back up in the air within the next year. When they do, American Airlines’ capacity issues will be resolved, and air-traffic-volume growth will come back into the picture.
American Airlines Stock Hasn’t Priced in the Upcoming Improvement
Over the next year, American Airlines’ performance will improve dramatically. That will lead to a huge rally by AAL stock, mostly because the stock today doesn’t price in any improvement, let alone a dramatic improvement.
American Airlines stock trades at 5.6-times analysts’ average forward earnings estimate. That’s dirt-cheap. Historically, AAL stock has traded at a forward price-earnings multiple north of seven, and its forward P/E ratio has often been above eight. Meanwhile, the average forward P/E multiple across the entire airline industry today is indeed .
Thus, AAL stock trades at a dirt-cheap forward earnings multiple that is discounted both relative to its history and the valuation of the entire airline sector today. Clearly, no good news is priced into AAL stock at this point.
As good news does materialize over the next 12 months, then AAL stock will jump. Simple modeling (based on low-single-digit-percentage revenue growth, gradual margin expansion and some share buybacks) implies that American Airlines can realistically net earnings per share of about $7.50 by 2025. Based on a forward multiple of eight, that implies a 2024 price target for AAL stock of $60. Discounted back by 10% per year, that equates to a 2019 price target of about $37.
Thus, fundamentals indicate that within the next few months, AAL stock can surge 30%.
The Bottom Line on AAL Stock
American Airlines stock has been killed over the past twenty months, and the downturn was justified.
But there’s opportunity in the rubble of this collapse. Specifically, over the next 12 months, the fundamentals, outlook, and optics of AAL should all meaningfully improve. As they do, depressed AAL stock looks well-positioned to stage a big comeback rally.
I’m a buyer of American Airlines on weakness ahead of that comeback rally. I think that AAL stock could exceed $35 within the next few months.
As of this writing, Luke Lango did not hold a position in any of the aforementioned securities, but may initiate a long position in AAL within the next 72 hours.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Thus, AAL stock trades at a dirt-cheap forward earnings multiple that is discounted both relative to its history and the valuation of the entire airline sector today. Then, recession fears and slowing global demand hurt AAL stock in late 2018. The last 20 months have been ugly for AAL stock.
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Then, recession fears and slowing global demand hurt AAL stock in late 2018. The last 20 months have been ugly for AAL stock. The headwinds which have hit AAL stock hard over the past 20 months will inevitably fade.
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Since those improvements aren’t priced into AAL stock today, American Airlines stock could be due for a big comeback rally between now and the end of the year. Then, recession fears and slowing global demand hurt AAL stock in late 2018. The last 20 months have been ugly for AAL stock.
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Since those improvements aren’t priced into AAL stock today, American Airlines stock could be due for a big comeback rally between now and the end of the year. Then, recession fears and slowing global demand hurt AAL stock in late 2018. The last 20 months have been ugly for AAL stock.
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6363.0
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2019-08-10 00:00:00 UTC
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American Airlines Doubles Down on Transatlantic Flights
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AAL
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https://www.nasdaq.com/articles/american-airlines-doubles-down-on-transatlantic-flights-2019-08-10
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nan
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nan
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Last year, American Airlines (NASDAQ: AAL) decided to implement deep cuts to its Asia route network, in the face of big losses on various routes from Chicago to East Asia. The carrier has redeployed most of this capacity on new transatlantic routes in 2019.
So far, it looks like that strategy is paying off for the largest U.S. airline. As a result, American Airlines plans to double down on transatlantic growth in 2020. Last week, the carrier announced five new transatlantic routes that will be launched between May and September of next year.
Europe is the new focus of American's international growth
American Airlines has launched a slew of new routes to Europe this year, in an effort to boost the profitability of its long-haul network. In Charlotte, its second-largest hub, the carrier began year-round flights to Munich. However, most of the new service has consisted of seasonal routes.
American Airlines has added a bunch of new routes to Europe this year. Image source: American Airlines.
American Airlines has begun summer-season service from Philadelphia to Berlin and Edinburgh -- two common destinations for U.S. airlines -- as well as Bologna, Italy and Dubrovnik, Croatia (both of which are off the beaten path). It has launched seasonal flights connecting Phoenix to London, Chicago to Athens, and Dallas-Fort Worth (DFW) to Dublin and Munich. American added extra flights on its existing routes from DFW to Paris and Madrid, too.
These moves have paid off in a big way. Last quarter, American Airlines increased its capacity 5.2% year over year in the transatlantic market. Nevertheless, passenger revenue per available seat mile (PRASM) rose 3% in the region.
Meanwhile, American Airlines slashed its capacity in Latin America by 7.4% and cut transpacific capacity by 13.5%. These cutbacks on underperforming routes enabled it to post PRASM growth of 4.4% in Latin America and 0.5% in the transpacific market. Shifting capacity from Asia (and to a lesser extent, Latin America) to Europe is thus driving strong unit revenue growth for American Airlines' international network as a whole.
More of the same is coming
For the 2020 summer season, American Airlines will drop the Bologna route it added this year, but it will increase capacity on its new seasonal Berlin and Dubrovnik routes. The carrier also plans to continue testing various new transatlantic routes.
Image source: American Airlines.
From DFW, American will begin year-round service to Tel Aviv next September. The airline used to serve Tel Aviv from its Philadelphia hub but dropped the route in early 2016 due to persistent losses. Management has higher expectations for the new route, as DFW is its largest hub -- with more than twice as many daily flights as American's hub in Philadelphia -- and serves a unique catchment area that doesn't have good service to Tel Aviv today.
American Airlines also plans to start seasonal service from Philadelphia to Casablanca, Morocco next June. This will be the airline's first route to Africa. Customers will eventually benefit from connections to other destinations in Africa on Royal Air Maroc, which is set to join American's oneworld alliance in mid-2020.
Finally, American Airlines plans to launch seasonal routes from Chicago to Budapest, Krakow, and Prague in May 2020. Management expects the new routes to benefit from strong local demand in Chicago, while also complementing its existing seasonal service from Philadelphia to Budapest and Prague.
A template for profitable growth
American Airlines has fallen behind its top rivals in terms of profitability in recent years. That said, it has a solid plan for becoming more profitable on domestic routes, by concentrating its growth in its three most lucrative hubs of Dallas-Fort Worth, Charlotte, and Washington, D.C. between 2019 and 2021.
Improving American's international network is a trickier task. The airline faces stiff competition in Los Angeles (its main West Coast hub), it has an undersized presence in New York, and its Philadelphia hub doesn't benefit from the same level of high-yield international business traffic as competitors' nearby hubs in New York and Washington, D.C.
However, American Airlines is gradually finding opportunities for profitable growth outside of the U.S. Its moves to shift capacity into Europe over the past year are driving PRASM increases. It will try to build on this success with further transatlantic expansion in 2020.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg is long January 2020 $20 calls on American Airlines Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Last year, American Airlines (NASDAQ: AAL) decided to implement deep cuts to its Asia route network, in the face of big losses on various routes from Chicago to East Asia. Shifting capacity from Asia (and to a lesser extent, Latin America) to Europe is thus driving strong unit revenue growth for American Airlines' international network as a whole. Management expects the new routes to benefit from strong local demand in Chicago, while also complementing its existing seasonal service from Philadelphia to Budapest and Prague.
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Last year, American Airlines (NASDAQ: AAL) decided to implement deep cuts to its Asia route network, in the face of big losses on various routes from Chicago to East Asia. Shifting capacity from Asia (and to a lesser extent, Latin America) to Europe is thus driving strong unit revenue growth for American Airlines' international network as a whole. More of the same is coming For the 2020 summer season, American Airlines will drop the Bologna route it added this year, but it will increase capacity on its new seasonal Berlin and Dubrovnik routes.
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Last year, American Airlines (NASDAQ: AAL) decided to implement deep cuts to its Asia route network, in the face of big losses on various routes from Chicago to East Asia. Europe is the new focus of American's international growth American Airlines has launched a slew of new routes to Europe this year, in an effort to boost the profitability of its long-haul network. More of the same is coming For the 2020 summer season, American Airlines will drop the Bologna route it added this year, but it will increase capacity on its new seasonal Berlin and Dubrovnik routes.
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Last year, American Airlines (NASDAQ: AAL) decided to implement deep cuts to its Asia route network, in the face of big losses on various routes from Chicago to East Asia. Last quarter, American Airlines increased its capacity 5.2% year over year in the transatlantic market. More of the same is coming For the 2020 summer season, American Airlines will drop the Bologna route it added this year, but it will increase capacity on its new seasonal Berlin and Dubrovnik routes.
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6364.0
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2019-08-09 00:00:00 UTC
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Notable Friday Option Activity: DHI, LRCX, AAL
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AAL
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https://www.nasdaq.com/articles/notable-friday-option-activity%3A-dhi-lrcx-aal-2019-08-09
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nan
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nan
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Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in Horton Inc (Symbol: DHI), where a total of 23,467 contracts have traded so far, representing approximately 2.3 million underlying shares. That amounts to about 54.8% of DHI's average daily trading volume over the past month of 4.3 million shares. Especially high volume was seen for the $42 strike call option expiring August 16, 2019, with 5,005 contracts trading so far today, representing approximately 500,500 underlying shares of DHI. Below is a chart showing DHI's trailing twelve month trading history, with the $42 strike highlighted in orange:
Lam Research Corp (Symbol: LRCX) saw options trading volume of 8,976 contracts, representing approximately 897,600 underlying shares or approximately 47% of LRCX's average daily trading volume over the past month, of 1.9 million shares. Particularly high volume was seen for the $225 strike call option expiring August 16, 2019, with 736 contracts trading so far today, representing approximately 73,600 underlying shares of LRCX. Below is a chart showing LRCX's trailing twelve month trading history, with the $225 strike highlighted in orange:
And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 25,030 contracts, representing approximately 2.5 million underlying shares or approximately 40.2% of AAL's average daily trading volume over the past month, of 6.2 million shares. Especially high volume was seen for the $25 strike put option expiring August 16, 2019, with 3,560 contracts trading so far today, representing approximately 356,000 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $25 strike highlighted in orange:
For the various different available expirations for DHI options, LRCX options, or AAL options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Especially high volume was seen for the $25 strike put option expiring August 16, 2019, with 3,560 contracts trading so far today, representing approximately 356,000 underlying shares of AAL. Below is a chart showing LRCX's trailing twelve month trading history, with the $225 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 25,030 contracts, representing approximately 2.5 million underlying shares or approximately 40.2% of AAL's average daily trading volume over the past month, of 6.2 million shares. Below is a chart showing AAL's trailing twelve month trading history, with the $25 strike highlighted in orange: For the various different available expirations for DHI options, LRCX options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing LRCX's trailing twelve month trading history, with the $225 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 25,030 contracts, representing approximately 2.5 million underlying shares or approximately 40.2% of AAL's average daily trading volume over the past month, of 6.2 million shares. Especially high volume was seen for the $25 strike put option expiring August 16, 2019, with 3,560 contracts trading so far today, representing approximately 356,000 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $25 strike highlighted in orange: For the various different available expirations for DHI options, LRCX options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing LRCX's trailing twelve month trading history, with the $225 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 25,030 contracts, representing approximately 2.5 million underlying shares or approximately 40.2% of AAL's average daily trading volume over the past month, of 6.2 million shares. Especially high volume was seen for the $25 strike put option expiring August 16, 2019, with 3,560 contracts trading so far today, representing approximately 356,000 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $25 strike highlighted in orange: For the various different available expirations for DHI options, LRCX options, or AAL options, visit StockOptionsChannel.com.
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Below is a chart showing LRCX's trailing twelve month trading history, with the $225 strike highlighted in orange: And American Airlines Group Inc (Symbol: AAL) saw options trading volume of 25,030 contracts, representing approximately 2.5 million underlying shares or approximately 40.2% of AAL's average daily trading volume over the past month, of 6.2 million shares. Especially high volume was seen for the $25 strike put option expiring August 16, 2019, with 3,560 contracts trading so far today, representing approximately 356,000 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $25 strike highlighted in orange: For the various different available expirations for DHI options, LRCX options, or AAL options, visit StockOptionsChannel.com.
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6365.0
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2019-08-08 00:00:00 UTC
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Boeing Stock Won’t Get Fixed Until the MAX Does
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AAL
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https://www.nasdaq.com/articles/boeing-stock-wont-get-fixed-until-the-max-does-2019-08-08
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Boeing Co (NYSE:) stock has crashed, having dropped 11% in the last 11 sessions through yesterday. Boeing stock is now down by a quarter from the all-time highs it reached in early March.
Source: Shutterstock
The issue that has bedeviled Boeing Co over the past five months has been of two 737 MAX 8 aircraft, one in Indonesia and the second in Ethiopia. Over the past two-plus weeks, there has been a growing sense that BA isn’t going to resume production of the MAX as soon as the owners of Boeing stock and Boeing Co management had hoped.
Boeing Co already took for MAX-related costs in Q2 . BA stock has weakened recently, partly because investors are worried that more such costs are on the way. Boeing keeps promising that the MAX will return to service relatively soon. It hasn’t happened, and it doesn’t appear like it will before the end of this year.
Until the issue is resolved one way or the other, Boeing stock isn’t going to move much. Whether the shares can rebound eventually depends on whether the company can ever get the MAX flying again. Right now, even that is far from guaranteed.
When Will the MAX Fly Again?
Not long after the second crash, many industry participants and observers – including Wall Street analysts – believed the 737 MAX would be back in the air relatively quickly. American Airlines Group (NYSE:), for instance, originally only cancelled 737 MAX flights through Apr. 24.
Those predictions have proven to be wildly optimistic. Instead, deadlines have been pushed further and further out. American now has pulled the MAX from its schedule through Nov. 2. Southwest Airlines (NYSE:) last month became the first company to rule out the 737 MAX for all of 2019.
For its part, Boeing is a bit more optimistic. CEO Dennis Muilenberg estimated on the company’s that the MAX could return to service “early in the fourth quarter.” But as shown by the comments of Boeing’s customers, many even in the industry don’t necessarily believe the Boeing Co CEO. As a Ryanair (NASDAQ: ) executive put it last month, “I am concerned at the way the MAX return to service keeps slipping.”
And there are reasons for that skepticism. In late June, the FAA in the MAX software that had to be fixed. That came just two weeks after an FAA regulator estimated the aircraft would be back in the air by December. The delay caused by that software fix, in theory, will delay the return of the MAX until 2020. And that’s a problem.
Why the MAX Is a Problem For Boeing Stock
It’s tempting to say that pushing out the MAX’s return to service by a few months doesn’t really matter for Boeing Co or for Boeing stock.
Indeed, from an earnings standpoint, delaying the MAX’s return by a quarter or two shouldn’t make that much of a difference. After all, it’s not like airlines can necessarily go elsewhere.
Boeing’s main competitor, Airbus (OTCMTKS:), already has an enormous backlog. There aren’t any other narrowbody manufacturers out there. Airlines can either fly the MAX or, basically, not fly at all. That’s why, as one analyst has put it, the 737 MAX is ““.
But there are two key issues with that relatively nonchalant attitude. First, the delays have real costs. Boeing has to reimburse airlines for their lost revenue, to the tune of billions of dollars. Even though the market cap of Boeing stock is in the $190 billion range, those expenses are getting material, as evidenced by the $5.6 billion total hit to the company’s Q2 earnings.
Second, the delays keep the concerns of passengers and regulators from fading. They are ultimately the ones who matter. If even a small minority of passengers won’t fly on MAX planes, the profitability of airlines, and thus the demand for Boeing Co planes, will be negatively impacted. And if regulators anywhere in the world refuse to sign off on the MAX, demand for the planes can be reduced.
Again, it’s tempting to see the decline of BA stock as a buying opportunity driven by investors and analysts who are focused on the short-term. But the point is that the short-term affects the long-term value of Boeing stock. Each month that goes by increases Boeing’s costs and the risk facing Boeing stock.
BA Stock Is a Bet on the MAX
All that said, it does seem like if Boeing can get the MAX flying again at some point, BA stock probably is too cheap. Wall Street analysts still, on average, expect the company’s earnings to rebound, and anticipate a return to a positive earning trend; their average 2023 EPS estimate is $31.
Conservatively assuming that Boeing stock’s price-earnings multiple will be in the mid-teens, if Boeing Co meets that EPS estimate, BA stock would return a healthy 10% per year plus 2.5% in dividends. Given that Boeing stock recently had a PE ratio of 20+, that outlook might even be conservative.
But the risks facing Boeing stock are significant and have to be priced into the shares. I’d wager many passengers, particularly those who are uncomfortable with flying in the first place, might refuse to ever fly on MAX planes.
And regulators outside the U.S., in particular, may be much less likely to put their professional reputations on the line for a model that already has crashed twice.
Meanwhile, Boeing’s defense business largely is immune to the MAX issues. But, as InvestorPlace contributor Dana Blankenhorn noted, Boeing Co rivals like Lockheed Martin (NYSE:) when it comes to defense.
And Boeing’s defense business has had its own execution issues. Specifically, debris has been . As a result the Air Force has withheld some $360 million in payments to Boeing.
Forced to choose, I’d bet Boeing gets through this mess, delivers much of its MAX backlog, and returns to earnings growth. And that almost certainly would enable BA stock to climb, given the growing demand for air travel in the developing world and even parts of the developed world.
But timing matters. And the risks are real. It’s hard to pound the table too forcefully on Boeing stock when the company isn’t making much progress in tackling the biggest of those risks.
As of this writing, Vince Martin has no positions in any securities mentioned.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Not long after the second crash, many industry participants and observers – including Wall Street analysts – believed the 737 MAX would be back in the air relatively quickly. Again, it’s tempting to see the decline of BA stock as a buying opportunity driven by investors and analysts who are focused on the short-term. It’s hard to pound the table too forcefully on Boeing stock when the company isn’t making much progress in tackling the biggest of those risks.
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Why the MAX Is a Problem For Boeing Stock It’s tempting to say that pushing out the MAX’s return to service by a few months doesn’t really matter for Boeing Co or for Boeing stock. Each month that goes by increases Boeing’s costs and the risk facing Boeing stock. Wall Street analysts still, on average, expect the company’s earnings to rebound, and anticipate a return to a positive earning trend; their average 2023 EPS estimate is $31.
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Why the MAX Is a Problem For Boeing Stock It’s tempting to say that pushing out the MAX’s return to service by a few months doesn’t really matter for Boeing Co or for Boeing stock. BA Stock Is a Bet on the MAX All that said, it does seem like if Boeing can get the MAX flying again at some point, BA stock probably is too cheap. Conservatively assuming that Boeing stock’s price-earnings multiple will be in the mid-teens, if Boeing Co meets that EPS estimate, BA stock would return a healthy 10% per year plus 2.5% in dividends.
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Why the MAX Is a Problem For Boeing Stock It’s tempting to say that pushing out the MAX’s return to service by a few months doesn’t really matter for Boeing Co or for Boeing stock. After all, it’s not like airlines can necessarily go elsewhere. BA Stock Is a Bet on the MAX All that said, it does seem like if Boeing can get the MAX flying again at some point, BA stock probably is too cheap.
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6366.0
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2019-07-30 00:00:00 UTC
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For Tesla, Facebook, and American Airlines, Nothing Is Simple
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AAL
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https://www.nasdaq.com/articles/for-tesla-facebook-and-american-airlines-nothing-is-simple-2019-07-30
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Somewhere between "numbers don't lie" and "there are lies, damn lies, and statistics" sits the truth that earnings reports, while a marvelous chance to peek under the hood of companies, don't entirely give the whole story.
Take, for example, Facebook (NASDAQ: FB). Its headline results were just the sort of thing Wall Street likes to see, with beats on both profit and revenue. Same at American Airlines (NASDAQ: AAL), where profit was higher than expected, passenger traffic was up, and management raised the full-year guidance range.
But as MarketFoolery host Chris Hill and senior analyst Jim Mueller note, there are reasons to be concerned about both. And as for Tesla (NASDAQ: TSLA), which underperformed, the warning signs are more ominous than even its weak numbers would indicate. In this podcast, the guys will dig into all three of those reports, and also discuss how they see the streaming video market evolving over the next few years.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.
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The author(s) may have a position in any stocks mentioned.
This video was recorded on July 25, 2019.
Chris Hill: It's Thursday, July 25. Welcome to MarketFoolery! I'm Chris Hill. Joining me in studio, Jim Mueller, investor at large. Thanks for being here!
Jim Mueller: Hey, Chris! How are you doing?
Hill: I'm good! We've got airlines, we've got automotive, we've got video streaming. We're going to start with the social network. Facebook's second quarter profits came in higher than expected. Daily active users are closing in on 1.6 billion. There are always so many numbers with Facebook. What stood out to you in this quarter?
Mueller: What stood out to me was the announced settlement with the FCC, actually --
Hill: FCC or FTC?
Mueller: FTC. Always get those U.S. department --
Hill: It's understandable. There are a few regulatory bodies that are sniffing around Facebook.
Mueller: Yeah. So, expectations for revenue about $16.5 billion, Facebook reported $16.9. Up about 28% year over year. They beat adjusted earnings guidance estimates by $0.12, reporting $1.99; 2.7 billion monthly users across its suite of apps. U.S. and Canada daily users up slightly. Europe was flat, about 290 million. But what surprised me was the revenue per user. The average revenue per user was up 18% to over $7 per user. There's a lot of incentive to get a lot of users on Facebook's platform, and that's part of the issue.
Hill: As we've talked about before, all you have to do is go to any advertising trade publication, do a Google search, a news search for chief marketing officers of major brands, major corporations. Facebook is delivering for advertisers. When that changes -- I don't want to discount across the river, where there's a number of regulatory bodies that are looking into Facebook. That is something that is going to have a real cost, not in terms of fines, but in terms of lawyers and staff hours and all of that. I don't want to discount that. But I think that as long as the advertisers are happy with the way Facebook is delivering for them, then this is not a business in trouble.
Mueller: No, not really. A lot of this is Facebook's own fault. The $5 billion settlement, which sounds like a lot of money, and it is, but Facebook brought in $16 billion in revenue in just three months, $5 billion payout, they've already set aside $3 billion and have almost $50 billion on the books. It's not going to hurt them. It's 3.3 months of free cash flow, for goodness' sake. But the whole thing was over Facebook breaking previous promises about not doing bad things. They've long been turning users into product. They had promised to stop sharing user data, but they didn't. They had promised to stop using phone numbers for advertising purposes. They didn't. And all this other stuff. They're shooting themselves in the foot.
But as that $7 per user number points out, there's a lot of money driving that kind of behavior. Whether Facebook can pivot to where they can satisfy regulators, satisfy their users about privacy concerns, and still make an equally large amount of money, is a big issue for the company. We're going to have to see how that plays out.
Hill: Over the last two years, they've done a better job of monetizing Instagram.
Mueller: Right. Instagram and WhatsApp. I don't know what all they have, Messenger, is that the name of it? The messaging app?
Hill: Yeah.
Mueller: They're gung ho on stories. There's more people turning to stories, and they'll figure out how to monetize that.
I don't have a Facebook account, partly because I don't trust the company. I think that is a potential issue for the company, if they continue to say one thing and do another. I don't think that'll destroy the company, but it might make advertisers start looking elsewhere if the company's reputation gets damaged badly enough.
Hill: Shares of Tesla are down 13% this morning after Tesla's second quarter loss was bigger than expected. Their revenue was also a little bit light. This has long been one of those businesses that you feel like, if the revenue number was higher, maybe the stock isn't dropping the way it is. But there just seemed like a lot of challenges on a lot of fronts. As has been the case for a couple of years now with Tesla, the clock is ticking.
Mueller: Definitely ticking. I'll say up front, I'm actually short Tesla the company via options. I'm not short because I hate Tesla or I hate Musk and I want them to fail and I'm cheering all their troubles. No. I think the company is fundamentally in trouble. For example, they were ballyhoo-ing the $614 million of free cash flow they generated this quarter. But where did that free cash flow come from? Well, they spent capex, capital expenditures, investments in equipment in such, less than half of what they depreciated. They're not even spending enough to maintain what they have. And they drew down inventory by some $450 million. That's also not sustainable. It's not what a growing company needs to do. They need to invest not only to maintain the equipment, but to buy more equipment to keep on growing. And if you're not doing that, you're not going to be a growing company.
In addition, they lowered the price of their Model 3s, which is supposed to be the car that is going to drive them forward, pun intended. But the question is, have they lowered it too much? Have they lowered the cost of making those things at the same rate percentage-wise as they've lowered the selling price? Probably not, because the margin's gone down. Once you lower the price, it's really hard to raise it back up. Are you selling cars for less than they cost to make? If you are, that's totally not sustainable.
Hill: Thank you for going into that level of depth because I think it's important that, look, name me a CEO out there who's more of a hot button leader than Elon Musk. I don't think there's anyone else out there who people have strong opinions about. When you essentially back Musk out of the equation -- and we'll get back to him in a second -- and just look at, where is the money going with this business? Put aside whatever you think about Elon Musk and look at, what are they doing in terms of spending money? What direction are their margins going in? All that sort of thing. And you pull back from that, and you just see a lot of things that you don't want to see. I forget which analyst said it -- there were a bunch of analyst notes that came out this morning. I'm paraphrasing here. I think it might have been Morgan Stanley. But it was essentially, "There's just not a lot to like in this quarter," referring to a lot of the things that you just referred to.
Mueller: Right. They want to launch the Model Y, which is the next generation of their car. But that requires production spending ahead of the actual building of the cars, because they have to get the plant build the Y. If the Model 3 is using up all their capacity already, and it is, where they're going to build the Y? If you lower your capital expenditure spending, you're not building plant to build this new Y. Then how can you rely upon the Y coming in and helping the company grow further? Yeah, there's a lot of questions aside from management and aside from electric cars saving the world and everything else. Aside from all that emotional stuff, just looking at the numbers raises a lot of questions.
Hill: And yet, and we'll wrap up with this, because it's Elon Musk leading the company, and his ability in the past to raise money, to pull a rabbit out of a hat, that sort of thing, this is why I wouldn't short the stock. That's just me. You're a more experienced investor than I am.
Mueller: [laughs] Well, maybe I'm a stupider investor than you.
Hill: [laughs] No, you're a better investor than I am, and you're certainly more experienced with options. But it is going to be interesting to see. As I said, the clock is ticking. I think in the next three months, one thing to watch is what conversation is there, if any, about raising money? Whether it's another round, or --
Mueller: They did say they felt they were self-sustaining now, without having to raise money. But they've said that before, too. One last point I'd like to raise is, Elon Musk has lost another one of his long-term lieutenants. Chief technology officer J. B. Straubel, it was announced that he was leaving the company, to become an advisor, whatever that means. But he's been there since 2003. He's one of the longest-term C-level officers to leave. That can't help Musk.
Hill: Yeah, that's another narrative working against this business.
American Airlines' second quarter profits came in higher than expected. They raised guidance for the full fiscal year. That is the one-two punch we like to see. And yet the shares of American Airlines are down about 3%. That's not falling through the floor, but I'm only slightly surprised at this.
Mueller: It was a good quarter. Passenger traffic was up. That's what drove all of this. And American Airlines raised the bottom end of their guidance. It was a $4-6 range, and now it's $4.50-$6.50 range per share for the full year. They reported about $12 billion in revenue. Basically matching expectations. That's up a little less than 3%. They beat EPS expectations by $0.03. Their net income level of $662 million was up almost 19% year over year. Traffic was higher. The term is passenger load factor, it's basically, how many people are in the seats of all possible seats that they have. That's 86.6%. That's up 3.8% year over year. That's really what was driving this. And then they have another metric -- well, I won't go into that. It's a little too far into the weeds. But basically, they've seen 11 straight quarters of improvement for this metric. That's pretty good. That doesn't happen very often.
But what's hurting the company, and still has a lot of uncertainty, and which might be playing into the share price drop this morning, is that 737 Max continues to be sitting on the tarmac, not doing its job of flying people around the country and around the world. The airline has 24 in its fleet, and as was supposed to get seven more this quarter. About 10% or 9% of their order book of 76. But, not being able to fly them hurt them to the tune of about $175 million in pre-tax income this quarter. That is about 17% of what they would have earned if the Max was flying. For the full year, $400 million they're not getting. And that hurts.
Hill: The story of the airline industry in 2019, I think at the end of the year, when we do our look-back show, this is going to be one of the dominant storylines of 2019, is the Boeing 737 Max. I was watching an interview this morning, Southwest Airlines also reported this morning, Southwest has more 737 Max planes in their fleet, which means they have more grounded. It's a greater impact. Gary Kelly, the CEO at Southwest, was doing a very nice job, a very polite job, of holding in his frustration, but he is clearly very frustrated. If you read a transcript, he's saying things like, "We're not happy about this," and it's been interesting to watch over the last six months CEOs like Gary Kelly and others go from, in the immediate aftermath of the second 737 Max crash, statements of support of Boeing, trust in Boeing, and they are all starting to back away. Very slowly, they're all starting to back away. And there's no reason for them to publicly negotiate with Boeing, but you have to believe that behind closed doors --
Mueller: Oh, there's loud voices, I'm sure.
Hill: [laughs] Loud voices, possibly some profanity. Essentially, as we've said for a while now, the longer this drags on, the greater the ability of airlines in the United States to say to Boeing some version of, "What are you going to do to make me stop from going over to Airbus and taking my business there?"
Mueller: Yeah, exactly. And it's going to continue for a few more months, at least. I looked up what Boeing was saying. They released earlier this week. They're saying, "We're still working with the FAA and other regulators," I got that one right. FAA. "We're still working with FAA and other regulators around the world to make sure all the certifications and the software upgrades and everything meets what everyone's asking for," and they expect to submit their final package sometime in September. Which could slip if the regulators say, "No, you need to fix this, you need to look at that," and so on. It just pushes it further out in the year. And they're saying they might be able to get the grounding lifted as early as early calendar Q4 this year, which puts it in October, November range. That means many more months -- three, four, five more months -- of airlines losing money by not being able to fly those planes.
Hill: The good news for airlines, I guess, is that not a lot of people travel in November and December.
Mueller: [laughs] Yeah. Right.
Hill: Quick shout out to our man Willie down in Norfolk, Virginia. Hang in there, Willie!
Also, shout out to our man behind the glass -- well, our man behind the glass is producer Dan Boyd, producer extraordinaire. But joining him today also, one of our members, Desmond Walker, hanging out with us. [claps] Desmond, thank you so much for being here!
Real quick, before we wrap up. I said that the other day, this is my favorite week of the year and it happens four times a year because so many companies are reporting. Comcast (NASDAQ: CMCSA) came out with their second quarter report and I was struck not necessarily by their results, but by the fact that Comcast, which owns NBC Universal, they said April 2020, that's when the NBC streaming service is going to launch. They provided virtually no other details beyond that. I don't blame them. But I'm curious. You're someone who keeps a close eye on the streaming video industry. I said this to you this morning, it's really turning into a rock fight right now. There are more companies coming out there. What do you see when you look at streaming right now?
Mueller: I don't think the rocks being thrown around are very big. [laughs] At least against the three giants. Last month I went up to New York overnight to attend the Kagan Media Summit for 2019. They presented a really interesting chart of the streamers. If you put out a bar chart of the streaming channels out there -- Netflix, Amazon, WWE, all of them -- you've got three big ones for the U.S. Amazon, about 63 million. Bar about two feet wide, for our non-visually --
Hill: [laughs] I was going to say, you know it's an audio podcast, right?
Mueller: Yes, I know. I just remembered that. [laughs] Netflix, pretty close at 58 million in the U.S. Hulu, about 23 million, so about half the other two. And then you have to squint to see everything else. HBO NOW is the biggest at a little over six million, one-tenth of what Amazon has. And then it goes down from there. Showtime, four million. CBS All Access, four million. Starz, three million and a half. Crunchyroll, an anime one, a favorite of mine and my wife's, one million and a half.
Hill: I'm sorry, Crunchyroll?
Mueller: Crunchyroll, yeah. Anime, it's good stuff!
Hill: I know what anime is, I've just never heard of Crunchyroll. Go on!
Mueller: Now you have. WWE Network, one million. And they have even smaller ones. So, there's a lot of little ones out there and a few big giants. NBC Universal, yeah, they're going to get The Office when the deal with Netflix expires at the end of 2020, which means, dozens of listeners, you have another 18 months to binge it on Netflix. But that's the story in the news. "The Office is leaving, Netflix is going down in flames!"
Hill: Friends, too.
Mueller: Friends, too. Big deal! That's Reed Hastings' response, pretty much. They have a lot of other content they feel is good enough to keep people coming in. That is what's driving everything, who has content you want to watch. NBC Universal will have The Office, of course. But they also said that they're going to have to get a lot of third party content, at least at the start, to fill the streaming pipes.
Hill: Promise me you're going to go to this same event in a year. Because in a year, they will presumably present data that includes Disney+, Apple TV+, we will by then know what NBC's plan is for their streaming service, they will have launched by then, or at least that's their plan. Good luck to them if they haven't launched by then. We'll have more information. And I agree with you. I think the concerns for Netflix in the short term are being overblown. I think that if you look out over the next five to 10 years, that's where the greater risk lies.
Mueller: There's going to be several winners, big winners, quite a handful of smaller winners, and quite possibly a fair amount of consolidation once it all shakes out and the costs of running a streaming service and paying for all the content and not being able to make it up on the revenue -- Disney expects to lose money on Disney+ for several years. But they have everything else Disney does to support that. That's what Netflix did when they did the streaming. They had the DVD by mail business. Remember that? That was a big cash cow for them. And they used that to support their streaming. And once they got the streaming going, and it's now profitable in the U.S. and Canada, and they would use that profitability to support the next launch. NBC Universal, Comcast is going to have to support whatever they're calling it. Did they give a name?
Hill: I want to say it's NBC Universal+, but I could be wrong about that. I just assume everyone's adding a plus. I assume there's a plus in there somewhere.
Mueller: [laughs] Sounds good! But, they're going to have to suffer through one, two, three years of not making money before they can make money off of just the streaming service. And if you don't have the backing of something else to support you, you're not going to make it very far and you'll be gobbled up by somebody else. And even if you do, if it's really small and you only have a million members, you still might be gobbled up.
Hill: It'll be fun to watch!
Mueller: Oh, yeah!
Hill: Jim Mueller, thanks for being here!
As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal record recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery! The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you on Monday!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Amazon and Walt Disney. Jim Mueller, CFA owns shares of Amazon and Netflix and has the following options: long January 2020 $1370 calls on Amazon, short January 2020 $1380 calls on Amazon, long January 2021 $150 calls on Apple, short January 2021 $160 calls on Apple, long January 2020 $220 calls on Netflix, short January 2021 $200 calls on Tesla, long January 2021 $200 puts on Tesla, short January 2021 $230 calls on Tesla, long January 2021 $230 puts on Tesla, short January 2021 $240 puts on Tesla, and long January 2021 $270 puts on Tesla. The Motley Fool owns shares of and recommends Amazon, Apple, Facebook, Netflix, Southwest Airlines, Tesla, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Same at American Airlines (NASDAQ: AAL), where profit was higher than expected, passenger traffic was up, and management raised the full-year guidance range. Hill: And yet, and we'll wrap up with this, because it's Elon Musk leading the company, and his ability in the past to raise money, to pull a rabbit out of a hat, that sort of thing, this is why I wouldn't short the stock. But what's hurting the company, and still has a lot of uncertainty, and which might be playing into the share price drop this morning, is that 737 Max continues to be sitting on the tarmac, not doing its job of flying people around the country and around the world.
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Same at American Airlines (NASDAQ: AAL), where profit was higher than expected, passenger traffic was up, and management raised the full-year guidance range. Jim Mueller, CFA owns shares of Amazon and Netflix and has the following options: long January 2020 $1370 calls on Amazon, short January 2020 $1380 calls on Amazon, long January 2021 $150 calls on Apple, short January 2021 $160 calls on Apple, long January 2020 $220 calls on Netflix, short January 2021 $200 calls on Tesla, long January 2021 $200 puts on Tesla, short January 2021 $230 calls on Tesla, long January 2021 $230 puts on Tesla, short January 2021 $240 puts on Tesla, and long January 2021 $270 puts on Tesla. The Motley Fool owns shares of and recommends Amazon, Apple, Facebook, Netflix, Southwest Airlines, Tesla, and Walt Disney.
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Same at American Airlines (NASDAQ: AAL), where profit was higher than expected, passenger traffic was up, and management raised the full-year guidance range. Hill: And yet, and we'll wrap up with this, because it's Elon Musk leading the company, and his ability in the past to raise money, to pull a rabbit out of a hat, that sort of thing, this is why I wouldn't short the stock. Jim Mueller, CFA owns shares of Amazon and Netflix and has the following options: long January 2020 $1370 calls on Amazon, short January 2020 $1380 calls on Amazon, long January 2021 $150 calls on Apple, short January 2021 $160 calls on Apple, long January 2020 $220 calls on Netflix, short January 2021 $200 calls on Tesla, long January 2021 $200 puts on Tesla, short January 2021 $230 calls on Tesla, long January 2021 $230 puts on Tesla, short January 2021 $240 puts on Tesla, and long January 2021 $270 puts on Tesla.
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Same at American Airlines (NASDAQ: AAL), where profit was higher than expected, passenger traffic was up, and management raised the full-year guidance range. This has long been one of those businesses that you feel like, if the revenue number was higher, maybe the stock isn't dropping the way it is. But what's hurting the company, and still has a lot of uncertainty, and which might be playing into the share price drop this morning, is that 737 Max continues to be sitting on the tarmac, not doing its job of flying people around the country and around the world.
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6367.0
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2019-07-30 00:00:00 UTC
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American Airlines Earnings: Plenty of Problems, but Signs of Progress
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AAL
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https://www.nasdaq.com/articles/american-airlines-earnings%3A-plenty-of-problems-but-signs-of-progress-2019-07-30
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nan
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nan
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American Airlines' (NASDAQ: AAL) second-quarter earnings report contained mixed news for shareholders. On the bright side, the airline giant's adjusted earnings per share came in slightly ahead of analysts' expectations last quarter. The company also stabilized its adjusted pre-tax margin. That said, American Airlines is lagging well behind its peers in terms of profitability, and many analysts and investors found its outlook for the rest of the year disappointing.
Indeed, looking just at the hard numbers, American Airlines seems to be in pretty bad shape. However, it is facing numerous short-term headwinds right now, and some of its main profit improvement initiatives haven't fully kicked in yet. The recent earnings report included some promising signs that American is close to turning the corner.
A modest earnings beat
Earlier this month, American Airlines raised its unit revenue forecast for the second quarter, saying that revenue per available seat mile (RASM) would increase by 3% to 4% year over year. Last week, the company confirmed that RASM wound up right in the middle of that updated guidance range, rising 3.5%.
Meanwhile, adjusted nonfuel unit costs rose 4.8% and American's average fuel price fell 4.4% to $2.14 per gallon. Both of those results fell within the company's updated guidance range.
Compared to the company's initial outlook for the second quarter (published back in April), unit revenue came in ahead of expectations while costs were roughly in line. The net result was that American Airlines' adjusted pre-tax margin reached 9%, up from 8.7% a year earlier and at the high end of the 7% to 9% range provided in April. Adjusted EPS reached $1.82, up 9.6% from $1.66 in the prior-year period.
American Airlines' profit increased modestly last quarter. Image source: American Airlines.
The guidance was mediocre
Looking ahead, American Airlines expects RASM growth between 1% and 3% in Q3. Fuel prices are still down year over year, offset by rising nonfuel unit costs -- driven in part by the grounding of the Boeing (NYSE: BA) 737 MAX. As a result, the carrier expects to post an adjusted pre-tax margin between 5.5% and 7.5% this quarter.
At the midpoint of the range, this would represent an improvement over American's 6% adjusted pre-tax margin in the third quarter of 2018. However, it's less than half of Delta Air Lines' (NYSE: DAL) projected profit margin for the current quarter. (American Airlines also trailed Delta's Q2 adjusted pre-tax margin of 16% by a country mile.)
American Airlines did raise the low end of its full-year EPS forecast by $0.50, yielding a new guidance range of $4.50 to $6.00. However, that still compares unfavorably to American's initial outlook for the year, when it called for EPS between $5.50 and $7.50.
There have been unusual disruptions this year
American Airlines' 2019 earnings results certainly look bad compared to how Delta is doing. However, American is facing a lot more headwinds than its rival right now.
Chief among those disruptions is the grounding of the Boeing 737 MAX. In conjunction with the earnings report, American raised its estimate of the full-year cost of the grounding from $350 million to $400 million. That includes $175 million in lost pre-tax profit last quarter -- reducing the company's pre-tax margin by almost 1.5 percentage points -- and $125 million in lost pre-tax profit for the third quarter.
American Airlines is also in the middle of a major labor dispute with its mechanics, which has dramatically hurt its reliability in recent months. This has increased its costs and may have driven some customers away. Additionally, to avoid exacerbating the impact of the Boeing 737 MAX grounding and the labor dispute, American Airlines delayed projects to add seats to its existing Boeing 737-800 and Airbus A321 jets, retrofits that would have reduced American's unit costs.
American Airlines has delayed plans to add seats to some of its older planes. Image source: American Airlines.
Finally, American Airlines has made changes to its loyalty program to make more redemption opportunities available. That's reducing its unit revenue growth by about 0.8 percentage points this year -- and negatively impacting its pre-tax margin by a similar amount.
The underlying trends are promising
On the bright side for investors, most of these headwinds should fade over the next few quarters. American Airlines is optimistic about being able to put its 737 MAX fleet back into service in November. (Boeing is also likely to compensate American for the costs of the grounding.) The airline will lap its loyalty program changes at the end of 2019, ending that headwind. And it expects to resume its 737-800 and A321 retrofit programs next year.
It's harder to be sure about when American Airlines will resolve the dispute with its mechanics, but it is close to getting a permanent court order that should reduce the impact on its operations. A similar scenario played out at Southwest Airlines earlier this year, and the two sides reached a new contract agreement soon after the airline took its mechanics' union to court.
Additionally, American Airlines added more than 100 daily flights to its schedule at Dallas-Fort Worth International Airport last quarter. Those extra flights at its largest (and highly profitable) hub are already producing above-average margins. The margin improvement from this expansion should increase as the new flights mature over the next several quarters. Similar growth plans at two other highly profitable hubs will add to American's unit revenue momentum over the next couple of years.
American Airlines is already delivering solid unit revenue growth and modest margin gains despite all of the issues it has encountered this year. With conditions likely to improve over the next few quarters, there's a good chance that profit growth will accelerate in 2020.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines and Southwest Airlines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines' (NASDAQ: AAL) second-quarter earnings report contained mixed news for shareholders. Compared to the company's initial outlook for the second quarter (published back in April), unit revenue came in ahead of expectations while costs were roughly in line. The net result was that American Airlines' adjusted pre-tax margin reached 9%, up from 8.7% a year earlier and at the high end of the 7% to 9% range provided in April.
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American Airlines' (NASDAQ: AAL) second-quarter earnings report contained mixed news for shareholders. A modest earnings beat Earlier this month, American Airlines raised its unit revenue forecast for the second quarter, saying that revenue per available seat mile (RASM) would increase by 3% to 4% year over year. That includes $175 million in lost pre-tax profit last quarter -- reducing the company's pre-tax margin by almost 1.5 percentage points -- and $125 million in lost pre-tax profit for the third quarter.
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American Airlines' (NASDAQ: AAL) second-quarter earnings report contained mixed news for shareholders. A modest earnings beat Earlier this month, American Airlines raised its unit revenue forecast for the second quarter, saying that revenue per available seat mile (RASM) would increase by 3% to 4% year over year. Additionally, to avoid exacerbating the impact of the Boeing 737 MAX grounding and the labor dispute, American Airlines delayed projects to add seats to its existing Boeing 737-800 and Airbus A321 jets, retrofits that would have reduced American's unit costs.
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American Airlines' (NASDAQ: AAL) second-quarter earnings report contained mixed news for shareholders. A modest earnings beat Earlier this month, American Airlines raised its unit revenue forecast for the second quarter, saying that revenue per available seat mile (RASM) would increase by 3% to 4% year over year. The net result was that American Airlines' adjusted pre-tax margin reached 9%, up from 8.7% a year earlier and at the high end of the 7% to 9% range provided in April.
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6368.0
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2019-07-30 00:00:00 UTC
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Why American Airlines' Earnings Beat Didn't Give It Any Lift
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AAL
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https://www.nasdaq.com/articles/why-american-airlines-earnings-beat-didnt-give-it-any-lift-2019-07-30
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nan
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nan
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American Airlines (NASDAQ: AAL) has reported on its second quarter, and there was plenty for investors to smile about. Profit was higher than expected, passenger traffic is up, and management at the world's largest airline raised the low end of its full-year guidance range.
But the share price slipped, and in this segment of the MarketFoolery podcast, host Chris Hill and senior analyst Jim Mueller talk about why: The 737 Max is still grounded, and it's putting a drag on the whole airline industry. The two reflect on the outlook for American, how it and its peers are shifting their stances on Boeing, and more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
This video was recorded on July 25, 2019.
Chris Hill: American Airlines' second quarter profits came in higher than expected. They raised guidance for the full fiscal year. That is the one-two punch we like to see. And yet the shares of American Airlines are down about 3%. That's not falling through the floor, but I'm only slightly surprised at this.
Jim Mueller: It was a good quarter. Passenger traffic was up. That's what drove all of this. And American Airlines raised the bottom end of their guidance. It was a $4-6 range, and now it's $4.50-$6.50 range per share for the full year. They reported about $12 billion in revenue. Basically matching expectations. That's up a little less than 3%. They beat EPS expectations by $0.03. Their net income level of $662 million was up almost 19% year over year. Traffic was higher. The term is passenger load factor, it's basically, how many people are in the seats of all possible seats that they have. That's 86.6%. That's up 3.8% year over year. That's really what was driving this. And then they have another metric -- well, I won't go into that. It's a little too far into the weeds. But basically, they've seen 11 straight quarters of improvement for this metric. That's pretty good. That doesn't happen very often.
But what's hurting the company, and still has a lot of uncertainty, and which might be playing into the share price drop this morning, is that 737 Max continues to be sitting on the tarmac, not doing its job of flying people around the country and around the world. The airline has 24 in its fleet, and as was supposed to get seven more this quarter. About 10% or 9% of their order book of 76. But, not being able to fly them hurt them to the tune of about $175 million in pre-tax income this quarter. That is about 17% of what they would have earned if the Max was flying. For the full year, $400 million they're not getting. And that hurts.
Hill: The story of the airline industry in 2019, I think at the end of the year, when we do our look-back show, this is going to be one of the dominant storylines of 2019, is the Boeing 737 Max. I was watching an interview this morning, Southwest Airlines also reported this morning, Southwest has more 737 Max planes in their fleet, which means they have more grounded. It's a greater impact. Gary Kelly, the CEO at Southwest, was doing a very nice job, a very polite job, of holding in his frustration, but he is clearly very frustrated. If you read a transcript, he's saying things like, "We're not happy about this," and it's been interesting to watch over the last six months CEOs like Gary Kelly and others go from, in the immediate aftermath of the second 737 Max crash, statements of support of Boeing, trust in Boeing, and they are all starting to back away. Very slowly, they're all starting to back away. And there's no reason for them to publicly negotiate with Boeing, but you have to believe that behind closed doors --
Mueller: Oh, there's loud voices, I'm sure.
Hill: [laughs] Loud voices, possibly some profanity. Essentially, as we've said for a while now, the longer this drags on, the greater the ability of airlines in the United States to say to Boeing some version of, "What are you going to do to make me stop from going over to Airbus and taking my business there?"
Mueller: Yeah, exactly. And it's going to continue for a few more months, at least. I looked up what Boeing was saying. They released earlier this week. They're saying, "We're still working with the FAA and other regulators," I got that one right. FAA. "We're still working with FAA and other regulators around the world to make sure all the certifications and the software upgrades and everything meets what everyone's asking for," and they expect to submit their final package sometime in September. Which could slip if the regulators say, "No, you need to fix this, you need to look at that," and so on. It just pushes it further out in the year. And they're saying they might be able to get the grounding lifted as early as early calendar Q4 this year, which puts it in October, November range. That means many more months -- three, four, five more months -- of airlines losing money by not being able to fly those planes.
Hill: The good news for airlines, I guess, is that not a lot of people travel in November and December.
Mueller: [laughs] Yeah. Right.
Chris Hill has no position in any of the stocks mentioned. Jim Mueller, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (NASDAQ: AAL) has reported on its second quarter, and there was plenty for investors to smile about. Profit was higher than expected, passenger traffic is up, and management at the world's largest airline raised the low end of its full-year guidance range. But the share price slipped, and in this segment of the MarketFoolery podcast, host Chris Hill and senior analyst Jim Mueller talk about why: The 737 Max is still grounded, and it's putting a drag on the whole airline industry.
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American Airlines (NASDAQ: AAL) has reported on its second quarter, and there was plenty for investors to smile about. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market. Chris Hill: American Airlines' second quarter profits came in higher than expected.
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American Airlines (NASDAQ: AAL) has reported on its second quarter, and there was plenty for investors to smile about. But the share price slipped, and in this segment of the MarketFoolery podcast, host Chris Hill and senior analyst Jim Mueller talk about why: The 737 Max is still grounded, and it's putting a drag on the whole airline industry. Chris Hill: American Airlines' second quarter profits came in higher than expected.
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American Airlines (NASDAQ: AAL) has reported on its second quarter, and there was plenty for investors to smile about. Chris Hill: American Airlines' second quarter profits came in higher than expected. Jim Mueller: It was a good quarter.
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6369.0
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2019-07-29 00:00:00 UTC
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The Implied Analyst 12-Month Target For FTXR
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AAL
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https://www.nasdaq.com/articles/the-implied-analyst-12-month-target-for-ftxr-2019-07-29
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nan
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nan
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Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the First Trust Nasdaq Transportation ETF (Symbol: FTXR), we found that the implied analyst target price for the ETF based upon its underlying holdings is $26.92 per unit.
With FTXR trading at a recent price near $24.17 per unit, that means that analysts see 11.39% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of FTXR's underlying holdings with notable upside to their analyst target prices are Intelsat SA (Symbol: I), American Airlines Group Inc (Symbol: AAL), and XPO Logistics, Inc. (Symbol: XPO). Although I has traded at a recent price of $21.71/share, the average analyst target is 58.58% higher at $34.43/share. Similarly, AAL has 36.41% upside from the recent share price of $31.24 if the average analyst target price of $42.62/share is reached, and analysts on average are expecting XPO to reach a target price of $79.21/share, which is 18.00% above the recent price of $67.13. Below is a twelve month price history chart comparing the stock performance of I, AAL, and XPO:
Below is a summary table of the current analyst target prices discussed above:
Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.
10 ETFs With Most Upside To Analyst Targets »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Below is a twelve month price history chart comparing the stock performance of I, AAL, and XPO: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Three of FTXR's underlying holdings with notable upside to their analyst target prices are Intelsat SA (Symbol: I), American Airlines Group Inc (Symbol: AAL), and XPO Logistics, Inc. (Symbol: XPO). Similarly, AAL has 36.41% upside from the recent share price of $31.24 if the average analyst target price of $42.62/share is reached, and analysts on average are expecting XPO to reach a target price of $79.21/share, which is 18.00% above the recent price of $67.13.
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Similarly, AAL has 36.41% upside from the recent share price of $31.24 if the average analyst target price of $42.62/share is reached, and analysts on average are expecting XPO to reach a target price of $79.21/share, which is 18.00% above the recent price of $67.13. Three of FTXR's underlying holdings with notable upside to their analyst target prices are Intelsat SA (Symbol: I), American Airlines Group Inc (Symbol: AAL), and XPO Logistics, Inc. (Symbol: XPO). Below is a twelve month price history chart comparing the stock performance of I, AAL, and XPO: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now?
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Similarly, AAL has 36.41% upside from the recent share price of $31.24 if the average analyst target price of $42.62/share is reached, and analysts on average are expecting XPO to reach a target price of $79.21/share, which is 18.00% above the recent price of $67.13. Below is a twelve month price history chart comparing the stock performance of I, AAL, and XPO: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Three of FTXR's underlying holdings with notable upside to their analyst target prices are Intelsat SA (Symbol: I), American Airlines Group Inc (Symbol: AAL), and XPO Logistics, Inc. (Symbol: XPO).
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Below is a twelve month price history chart comparing the stock performance of I, AAL, and XPO: Below is a summary table of the current analyst target prices discussed above: Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Three of FTXR's underlying holdings with notable upside to their analyst target prices are Intelsat SA (Symbol: I), American Airlines Group Inc (Symbol: AAL), and XPO Logistics, Inc. (Symbol: XPO). Similarly, AAL has 36.41% upside from the recent share price of $31.24 if the average analyst target price of $42.62/share is reached, and analysts on average are expecting XPO to reach a target price of $79.21/share, which is 18.00% above the recent price of $67.13.
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6370.0
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2019-07-25 00:00:00 UTC
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Noteworthy Thursday Option Activity: AAL, UAA, LMT
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AAL
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https://www.nasdaq.com/articles/noteworthy-thursday-option-activity%3A-aal-uaa-lmt-2019-07-25
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nan
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nan
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Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 51,330 contracts have traded so far, representing approximately 5.1 million underlying shares. That amounts to about 99.6% of AAL's average daily trading volume over the past month of 5.2 million shares. Particularly high volume was seen for the $34 strike call option expiring July 26, 2019, with 3,296 contracts trading so far today, representing approximately 329,600 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange:
Under Armour Inc (Symbol: UAA) saw options trading volume of 28,336 contracts, representing approximately 2.8 million underlying shares or approximately 86.5% of UAA's average daily trading volume over the past month, of 3.3 million shares. Particularly high volume was seen for the $30 strike call option expiring September 20, 2019, with 15,607 contracts trading so far today, representing approximately 1.6 million underlying shares of UAA. Below is a chart showing UAA's trailing twelve month trading history, with the $30 strike highlighted in orange:
And Lockheed Martin Corp (Symbol: LMT) saw options trading volume of 9,686 contracts, representing approximately 968,600 underlying shares or approximately 81.5% of LMT's average daily trading volume over the past month, of 1.2 million shares. Especially high volume was seen for the $320 strike put option expiring August 16, 2019, with 802 contracts trading so far today, representing approximately 80,200 underlying shares of LMT. Below is a chart showing LMT's trailing twelve month trading history, with the $320 strike highlighted in orange:
For the various different available expirations for AAL options, UAA options, or LMT options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $34 strike call option expiring July 26, 2019, with 3,296 contracts trading so far today, representing approximately 329,600 underlying shares of AAL. Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 51,330 contracts have traded so far, representing approximately 5.1 million underlying shares. That amounts to about 99.6% of AAL's average daily trading volume over the past month of 5.2 million shares.
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Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: Under Armour Inc (Symbol: UAA) saw options trading volume of 28,336 contracts, representing approximately 2.8 million underlying shares or approximately 86.5% of UAA's average daily trading volume over the past month, of 3.3 million shares. Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 51,330 contracts have traded so far, representing approximately 5.1 million underlying shares. That amounts to about 99.6% of AAL's average daily trading volume over the past month of 5.2 million shares.
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Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 51,330 contracts have traded so far, representing approximately 5.1 million underlying shares. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: Under Armour Inc (Symbol: UAA) saw options trading volume of 28,336 contracts, representing approximately 2.8 million underlying shares or approximately 86.5% of UAA's average daily trading volume over the past month, of 3.3 million shares. That amounts to about 99.6% of AAL's average daily trading volume over the past month of 5.2 million shares.
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Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: Under Armour Inc (Symbol: UAA) saw options trading volume of 28,336 contracts, representing approximately 2.8 million underlying shares or approximately 86.5% of UAA's average daily trading volume over the past month, of 3.3 million shares. Among the underlying components of the S&P 500 index, we saw noteworthy options trading volume today in American Airlines Group Inc (Symbol: AAL), where a total of 51,330 contracts have traded so far, representing approximately 5.1 million underlying shares. That amounts to about 99.6% of AAL's average daily trading volume over the past month of 5.2 million shares.
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6371.0
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2019-07-25 00:00:00 UTC
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American Airlines Earnings: Why AAL Stock Is Shifting Down Today
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AAL
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https://www.nasdaq.com/articles/american-airlines-earnings%3A-why-aal-stock-is-shifting-down-today-2019-07-25
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nan
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nan
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American Airlines (NASDAQ:) rolled out its latest quarterly earnings figures Thursday, amassing a profit and sales that surpassed expectations, although aircraft cancellations are slated to harm its 2019 income, pushing AAL stock down close to 5%.
Source: Shutterstock
The global airline — hailing out of Fort Worth, Texas — on its second-quarter results as it reached the midpoint of its fiscal 2019. Profit tallied up to $1.82 per share, besting the Wall Street consensus outlook by 4 cents per share.
American Airlines sales increased about 3% when compared to the year-ago period, arriving at $11.96 billion. This figure is also a touch higher than the $11.975 billion that analysts predicted.
Revenue and earnings may be stronger than Wall Street called for, yet 737 Max aircraft cancellations during the quarter lowered the period’s pre-tax income by about $175 million. This move is also projected to reduce fiscal 2019 pre-tax profit by roughly $400 million.
On the positive side of things, American Airlines added that its passenger unit revenue gained 4%, while total unit revenue surged 3.5%. For its third quarter of 2019, the airline sees total unit revenue surging 1% to 3% year-over-year.
As far as full-year earnings go, the airline updated its guidance to now be in the range of $4.50 to $6.00 per share, higher than its previous view of $4.00 to $6.00 per share. The midpoint profit outlook of $5.25 per share, ahead of the $5.16 per share that analysts called for.
AAL stock is falling 4.9% as of Thursday in the early afternoon.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines (NASDAQ:) rolled out its latest quarterly earnings figures Thursday, amassing a profit and sales that surpassed expectations, although aircraft cancellations are slated to harm its 2019 income, pushing AAL stock down close to 5%. AAL stock is falling 4.9% as of Thursday in the early afternoon. Source: Shutterstock The global airline — hailing out of Fort Worth, Texas — on its second-quarter results as it reached the midpoint of its fiscal 2019.
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American Airlines (NASDAQ:) rolled out its latest quarterly earnings figures Thursday, amassing a profit and sales that surpassed expectations, although aircraft cancellations are slated to harm its 2019 income, pushing AAL stock down close to 5%. AAL stock is falling 4.9% as of Thursday in the early afternoon. Revenue and earnings may be stronger than Wall Street called for, yet 737 Max aircraft cancellations during the quarter lowered the period’s pre-tax income by about $175 million.
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American Airlines (NASDAQ:) rolled out its latest quarterly earnings figures Thursday, amassing a profit and sales that surpassed expectations, although aircraft cancellations are slated to harm its 2019 income, pushing AAL stock down close to 5%. AAL stock is falling 4.9% as of Thursday in the early afternoon. On the positive side of things, American Airlines added that its passenger unit revenue gained 4%, while total unit revenue surged 3.5%.
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American Airlines (NASDAQ:) rolled out its latest quarterly earnings figures Thursday, amassing a profit and sales that surpassed expectations, although aircraft cancellations are slated to harm its 2019 income, pushing AAL stock down close to 5%. AAL stock is falling 4.9% as of Thursday in the early afternoon. Revenue and earnings may be stronger than Wall Street called for, yet 737 Max aircraft cancellations during the quarter lowered the period’s pre-tax income by about $175 million.
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6372.0
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2019-07-25 00:00:00 UTC
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American Airlines Boosts FY19 Adj. EPS Outlook - Quick Facts
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AAL
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https://www.nasdaq.com/articles/american-airlines-boosts-fy19-adj.-eps-outlook-quick-facts-2019-07-25
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nan
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nan
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(RTTNews) - While reporting financial results for the second quarter, American Airlines Group Inc (AAL) on Thursday raised its adjusted earnings guidance for the full year 2019 to a range of $4.50 and $6.00 per share from the prior forecast range of $4.00 to $6.00 per share.
On average, 21 analysts polled by Thomson Reuters expect the company to report earnings of $5.19 per share for the year. Analysts' estimates typically exclude special items.
American also expects its third-quarter 2019 TRASM to increase about 1.0 to 3.0 percent year-over-year.
Further, American declared a dividend of $0.10 per share to be paid on August 21, 2019, to stockholders of record as of August 7, 2019.
For the second quarter, the company reported net income of $662 million or $1.49 per share, higher than $556 million or $1.20 per share in the prior-quarter. Adjusted earnings per share were $1.82, compared to $1.66 per share in the year-ago quarter.
Total operating revenues for the quarter grew 2.7 percent to $11.96 billion from the same quarter last year.
Analysts expected quarterly earnings of $1.79 per share on sales of $11.96 billion.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - While reporting financial results for the second quarter, American Airlines Group Inc (AAL) on Thursday raised its adjusted earnings guidance for the full year 2019 to a range of $4.50 and $6.00 per share from the prior forecast range of $4.00 to $6.00 per share. On average, 21 analysts polled by Thomson Reuters expect the company to report earnings of $5.19 per share for the year. Analysts expected quarterly earnings of $1.79 per share on sales of $11.96 billion.
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(RTTNews) - While reporting financial results for the second quarter, American Airlines Group Inc (AAL) on Thursday raised its adjusted earnings guidance for the full year 2019 to a range of $4.50 and $6.00 per share from the prior forecast range of $4.00 to $6.00 per share. On average, 21 analysts polled by Thomson Reuters expect the company to report earnings of $5.19 per share for the year. For the second quarter, the company reported net income of $662 million or $1.49 per share, higher than $556 million or $1.20 per share in the prior-quarter.
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(RTTNews) - While reporting financial results for the second quarter, American Airlines Group Inc (AAL) on Thursday raised its adjusted earnings guidance for the full year 2019 to a range of $4.50 and $6.00 per share from the prior forecast range of $4.00 to $6.00 per share. For the second quarter, the company reported net income of $662 million or $1.49 per share, higher than $556 million or $1.20 per share in the prior-quarter. Adjusted earnings per share were $1.82, compared to $1.66 per share in the year-ago quarter.
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(RTTNews) - While reporting financial results for the second quarter, American Airlines Group Inc (AAL) on Thursday raised its adjusted earnings guidance for the full year 2019 to a range of $4.50 and $6.00 per share from the prior forecast range of $4.00 to $6.00 per share. On average, 21 analysts polled by Thomson Reuters expect the company to report earnings of $5.19 per share for the year. Adjusted earnings per share were $1.82, compared to $1.66 per share in the year-ago quarter.
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6373.0
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2019-07-25 00:00:00 UTC
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American Airlines Group Inc Q2 adjusted earnings of $1.82 per share
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AAL
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https://www.nasdaq.com/articles/american-airlines-group-inc-q2-adjusted-earnings-of-%241.82-per-share-2019-07-25
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(RTTNews) - American Airlines Group Inc (AAL) reported a profit for its second quarter that advanced from the same period last year.
The company's earnings totaled $662 million, or $1.49 per share. This compares with $556 million, or $1.20 per share, in last year's second quarter.
Excluding items, American Airlines Group Inc reported adjusted earnings of $810 million or $1.82 per share for the period.
The company's revenue for the quarter rose 2.7% to $11.96 billion from $11.64 billion last year.
American Airlines Group Inc earnings at a glance:
-Earnings (Q2): $810 Mln. vs. $770 Mln. last year. -EPS (Q2): $1.82 vs. $1.66 last year. -Revenue (Q2): $11.96 Bln vs. $11.64 Bln last year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - American Airlines Group Inc (AAL) reported a profit for its second quarter that advanced from the same period last year. Excluding items, American Airlines Group Inc reported adjusted earnings of $810 million or $1.82 per share for the period. American Airlines Group Inc earnings at a glance: -Earnings (Q2): $810 Mln.
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(RTTNews) - American Airlines Group Inc (AAL) reported a profit for its second quarter that advanced from the same period last year. Excluding items, American Airlines Group Inc reported adjusted earnings of $810 million or $1.82 per share for the period. American Airlines Group Inc earnings at a glance: -Earnings (Q2): $810 Mln.
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(RTTNews) - American Airlines Group Inc (AAL) reported a profit for its second quarter that advanced from the same period last year. This compares with $556 million, or $1.20 per share, in last year's second quarter. Excluding items, American Airlines Group Inc reported adjusted earnings of $810 million or $1.82 per share for the period.
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(RTTNews) - American Airlines Group Inc (AAL) reported a profit for its second quarter that advanced from the same period last year. This compares with $556 million, or $1.20 per share, in last year's second quarter. American Airlines Group Inc earnings at a glance: -Earnings (Q2): $810 Mln.
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6374.0
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2019-07-25 00:00:00 UTC
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American Airlines Group Q2 19 Earnings Conference Call At 8:30 AM ET
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AAL
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https://www.nasdaq.com/articles/american-airlines-group-q2-19-earnings-conference-call-at-8%3A30-am-et-2019-07-25
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(RTTNews) - American Airlines Group Inc. (AAL) will host a conference call at 8:30 AM ET on July 25, 2019, to discuss Q2 19 earnings results.
To access the live webcast, log on to https://americanairlines.gcs-web.com/
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - American Airlines Group Inc. (AAL) will host a conference call at 8:30 AM ET on July 25, 2019, to discuss Q2 19 earnings results. To access the live webcast, log on to https://americanairlines.gcs-web.com/ The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - American Airlines Group Inc. (AAL) will host a conference call at 8:30 AM ET on July 25, 2019, to discuss Q2 19 earnings results. To access the live webcast, log on to https://americanairlines.gcs-web.com/ The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - American Airlines Group Inc. (AAL) will host a conference call at 8:30 AM ET on July 25, 2019, to discuss Q2 19 earnings results. To access the live webcast, log on to https://americanairlines.gcs-web.com/ The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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(RTTNews) - American Airlines Group Inc. (AAL) will host a conference call at 8:30 AM ET on July 25, 2019, to discuss Q2 19 earnings results. To access the live webcast, log on to https://americanairlines.gcs-web.com/ The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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6375.0
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2019-07-24 00:00:00 UTC
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Notable Earnings To Watch On July 25 - MMM, AMZN, GOOGL, LH, AAL, LUV, BMY, HSY
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AAL
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https://www.nasdaq.com/articles/notable-earnings-to-watch-on-july-25-mmm-amzn-googl-lh-aal-luv-bmy-hsy-2019-07-24
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nan
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(RTTNews) - Among the companies slated to publish their quarterly financial results, these are few notable big names to watch on Thursday, July 25, 2019.
* 3M Co. (MMM) * Amazon.com Inc. (AMZN) * Alphabet Inc. (GOOGL) * Laboratory Corporation of America Holdings (LH) * American Airlines Group Inc. (AAL) * Southwest Airlines Co. (LUV) * The Hershey Co. (HSY) * Bristol-Myers Squibb Co. (BMY)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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* 3M Co. (MMM) * Amazon.com Inc. (AMZN) * Alphabet Inc. (GOOGL) * Laboratory Corporation of America Holdings (LH) * American Airlines Group Inc. (AAL) * Southwest Airlines Co. (LUV) * The Hershey Co. (HSY) * Bristol-Myers Squibb Co. (BMY) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. (RTTNews) - Among the companies slated to publish their quarterly financial results, these are few notable big names to watch on Thursday, July 25, 2019.
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* 3M Co. (MMM) * Amazon.com Inc. (AMZN) * Alphabet Inc. (GOOGL) * Laboratory Corporation of America Holdings (LH) * American Airlines Group Inc. (AAL) * Southwest Airlines Co. (LUV) * The Hershey Co. (HSY) * Bristol-Myers Squibb Co. (BMY) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. (RTTNews) - Among the companies slated to publish their quarterly financial results, these are few notable big names to watch on Thursday, July 25, 2019.
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* 3M Co. (MMM) * Amazon.com Inc. (AMZN) * Alphabet Inc. (GOOGL) * Laboratory Corporation of America Holdings (LH) * American Airlines Group Inc. (AAL) * Southwest Airlines Co. (LUV) * The Hershey Co. (HSY) * Bristol-Myers Squibb Co. (BMY) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. (RTTNews) - Among the companies slated to publish their quarterly financial results, these are few notable big names to watch on Thursday, July 25, 2019.
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* 3M Co. (MMM) * Amazon.com Inc. (AMZN) * Alphabet Inc. (GOOGL) * Laboratory Corporation of America Holdings (LH) * American Airlines Group Inc. (AAL) * Southwest Airlines Co. (LUV) * The Hershey Co. (HSY) * Bristol-Myers Squibb Co. (BMY) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. (RTTNews) - Among the companies slated to publish their quarterly financial results, these are few notable big names to watch on Thursday, July 25, 2019.
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6376.0
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2019-07-23 00:00:00 UTC
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The American Airlines-Qantas Joint Venture Is Finally Cleared to Fly
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AAL
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https://www.nasdaq.com/articles/the-american-airlines-qantas-joint-venture-is-finally-cleared-to-fly-2019-07-24
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In recent years, two of the three U.S. legacy carriers have had joint venture partners in the Oceania region to complement their own service. United Airlines (NASDAQ: UAL) has partnered with Air New Zealand for service between the U.S. and Australia/New Zealand, while Delta Air Lines (NYSE: DAL) teamed up with Virgin Australia. That has left only American Airlines (NASDAQ: AAL) without a partner on the other side of the Pacific.
For several years, American has been trying to rectify that situation by forming a joint venture with Australian market leader Qantas (NASDAQOTH: QUBSF). However, the carriers' desire to coordinate schedules and pricing ran into regulatory obstacles for a while. The U.S. Department of Transportation (DOT) finally gave its official blessing to the joint venture last week.
American Airlines' joint venture with Qantas was finally approved last Friday. Image source: American Airlines.
Why airlines like international joint ventures
A few international joint ventures with antitrust immunity existed prior to the Great Recession, but American Airlines, Delta Air Lines, and United Airlines have aggressively pursued new ones over the past decade. Cynics might say that the airlines have sought antitrust immunity with foreign carriers to reduce competition in the market and support prices.
To some extent, that's probably true. However, the joint ventures have other important benefits for airlines -- and for consumers. Most notably, by coordinating schedules, two airlines based in different countries can offer smoother connections at their respective hubs, stimulating connecting traffic. That can potentially enable new routes that wouldn't be viable otherwise.
The joint ventures between Delta, United, and (going forward) American and their partners in the South Pacific are unusual in that there are relatively few flights from the U.S. to Australia and New Zealand, due to the enormous distances involved. But the American Airlines-Qantas joint venture could be a game changer, because Qantas is by far the largest airline in its region.
American Airlines and Qantas are planning for lots of growth
As part of their application for antitrust immunity, American Airlines and Qantas said that they would add up to three new routes within two years if their joint venture was approved. Indeed, soon after the joint venture received tentative approval last month, Qantas announced plans to fly from Brisbane to San Francisco and Chicago by April 2020. The proposed San Francisco flights are set to operate three times a week. Meanwhile, the Chicago route -- which will become the fourth-longest nonstop flight in the world -- will operate four times a week.
Qantas plans to start two new routes to the U.S. next spring. Image source: Qantas.
The joint venture would have a relatively small benefit for the San Francisco route, as American Airlines doesn't operate many flights there. However, American Airlines' hub in Chicago will be critical to supplying connecting traffic to fill Qantas' flights from the Windy City to Brisbane.
The third potential new route hasn't been announced yet. Since the first two new routes will be operated by Qantas, it's a good bet that the third will be on American Airlines planes.
The most logical new route possibilities would be Dallas/Fort Worth-Auckland or Dallas/Fort Worth-Brisbane, taking advantage of American Airlines' largest hub. In terms of both range and capacity, American's 787-9 Dreamliners should be suitable for either route. Qantas and its low-cost affiliate Jetstar can provide connections to numerous other destinations in Australia and New Zealand from either Auckland or Brisbane.
Looking further ahead, Qantas expects to order ultra-long-range jets later this year that will be capable of nonstop flights from Sydney to New York. Qantas hopes to launch this route (along with others connecting Sydney and Melbourne to London) as soon as 2022. Nonstop Sydney-New York flights would mainly serve local traffic between the two cities, but American Airlines would also be able to supply some connecting traffic in New York.
Will the joint venture be anticompetitive?
The biggest concern for travelers is whether the American Airlines-Qantas joint venture could drive up prices for flights between the U.S. and Australia in particular.
This concern was a big reason why it took so long for the two carriers to get their joint venture approved. Whereas the Delta-Virgin Australia and United-Air New Zealand joint ventures each carry less than 20% of the passenger traffic between the U.S. and Australia, Qantas alone had 46% market share as of last year. American Airlines is a relatively small player in the market, though, with just one daily flight to Australia and 5% market share.
Due to the carriers' growth plans, the joint venture's market share for travel between the U.S. and Australia is likely to rise well beyond 50% in the coming years. That said, American Airlines and Qantas argue that their joint venture will actually lead to lower fares, as the airlines will be able to access seats on each other's networks at better prices than under the current codeshare arrangement.
As a result, regulators think the benefits of the joint venture will outweigh the potential harms. The DOT isn't taking chances, though. American Airlines and Qantas will have to do a "self-assessment" of the joint venture's impact on competition in 2026, which the DOT will review. If regulators find that competition is suffering, they will be able to take action to ensure that the American Airlines-Qantas joint venture lives up to its promises.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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That has left only American Airlines (NASDAQ: AAL) without a partner on the other side of the Pacific. The joint ventures between Delta, United, and (going forward) American and their partners in the South Pacific are unusual in that there are relatively few flights from the U.S. to Australia and New Zealand, due to the enormous distances involved. Indeed, soon after the joint venture received tentative approval last month, Qantas announced plans to fly from Brisbane to San Francisco and Chicago by April 2020.
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That has left only American Airlines (NASDAQ: AAL) without a partner on the other side of the Pacific. United Airlines (NASDAQ: UAL) has partnered with Air New Zealand for service between the U.S. and Australia/New Zealand, while Delta Air Lines (NYSE: DAL) teamed up with Virgin Australia. Why airlines like international joint ventures A few international joint ventures with antitrust immunity existed prior to the Great Recession, but American Airlines, Delta Air Lines, and United Airlines have aggressively pursued new ones over the past decade.
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That has left only American Airlines (NASDAQ: AAL) without a partner on the other side of the Pacific. Why airlines like international joint ventures A few international joint ventures with antitrust immunity existed prior to the Great Recession, but American Airlines, Delta Air Lines, and United Airlines have aggressively pursued new ones over the past decade. American Airlines and Qantas are planning for lots of growth As part of their application for antitrust immunity, American Airlines and Qantas said that they would add up to three new routes within two years if their joint venture was approved.
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That has left only American Airlines (NASDAQ: AAL) without a partner on the other side of the Pacific. United Airlines (NASDAQ: UAL) has partnered with Air New Zealand for service between the U.S. and Australia/New Zealand, while Delta Air Lines (NYSE: DAL) teamed up with Virgin Australia. American Airlines and Qantas are planning for lots of growth As part of their application for antitrust immunity, American Airlines and Qantas said that they would add up to three new routes within two years if their joint venture was approved.
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6377.0
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2019-07-22 00:00:00 UTC
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Industry Tailwinds Will Help United Airlines' Profits Soar In 2019
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AAL
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https://www.nasdaq.com/articles/industry-tailwinds-will-help-united-airlines-profits-soar-in-2019-2019-07-22
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United Airline Holdings (NYSE:UAL) is an airline major based out of Chicago, Illinois. It operates 4,900 flights to 355 destinations across five continents. In 2018 it carried over 158 million passengers and flew over 1.7 million flights. The company reported Q2 results earlier this week. During the quarter, United overcame issues stemming from its inoperative 737-MAX fleet to post better-than-expected numbers. We currently have a price estimate of $102 per share for United’s stock, which is roughly 10% ahead of the market price. Our interactive dashboard summarizes United Airlines’ Earnings and also highlights our outlook for full-year 2019. Additionally, you can see more Trefis data for Industrials & Transportation companies here.
Second Quarter Highlights:
United’s revenue came in as expected, improving 6% year-on-year, to $11.4 billion. Strong passenger demand during the quarter helped pushed revenue higher.
It reported a net income of $1.1 billion, representing a 54% increase YoY. The airline was able to take advantage of strong consumer demand, with Mainline and Regional operations both witnessing higher demand than what was witnessed a year ago.
With strong demand boosting efficiency, United was able to see its margins improve to 12% for the quarter – 4 basis points higher than the figure a year ago.
Earnings per share came in at $4.21 for the quarter, beating market consensus, and well ahead of the figure of $2.48 for Q2 2018.
Revenue per available seat mile (RASM) rose 2.5% year-on-year, while, cost per available seat mile (CASM) decreased 0.4% year-on-year. The fall in costs reflects United’s continued efforts to improve its on-ground logistics and reduce the costs of its operations. The increase in RASM was, by and large, a result of two factors:
Firstly, an increase in ticket pricing
Secondly, a larger percentage of passengers flying premium class.
With lower oil prices, total fuel costs fell 2% YoY despite an increase in fuel volume.
Improved margins and a consolidation in operations helped United’s cash and cash equivalents jump 89% YoY to $3.2 billion.
Our takeaway for the quarter and our outlook for the year:
United served over 43 million passengers during the quarter, which is a record for any second-quarter in the airline’s history.
It also added 34 new routes to its operations, and among major airlines United had the second-best completion factor and second-fewest cancellations.
The management has continued to focus on the strategy that it had laid out over the past couple of quarters, i.e., focusing on premium passengers, and its mainline operations. Both strategies seem to be paying dividend.
United continued to add capacity during the quarter by adding multiple aircrafts to its fleet, and with load factor improving for the quarter, the company is well placed to achieve its revenue and earnings target for the year.
The airlines saw domestic U.S. demand to be stronger than the demand on its international operations, with both Europe and Asia witnessing a slowdown in their economies. Latin America, on the other hand, experienced a 14% growth, breaking with the trend witnessed in Asia and Europe. We expect that Asia and Europe will trail the U.S. in terms of revenue growth for the year due to macro-economic headwinds in these regions.
For the full year, we estimate that United’s revenue will grow 8% to $44.5 billion. While management’s guidance pegs earnings per share to come in at $11.50 per share, we at Trefis expect earnings per share to come in at $13.50 for the year.
United continues to be a strong performer in the airline industry. We expect the airline to continue to witness similarly positive results right through the year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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With strong demand boosting efficiency, United was able to see its margins improve to 12% for the quarter – 4 basis points higher than the figure a year ago. It also added 34 new routes to its operations, and among major airlines United had the second-best completion factor and second-fewest cancellations. We expect that Asia and Europe will trail the U.S. in terms of revenue growth for the year due to macro-economic headwinds in these regions.
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Second Quarter Highlights: United’s revenue came in as expected, improving 6% year-on-year, to $11.4 billion. Strong passenger demand during the quarter helped pushed revenue higher. The airline was able to take advantage of strong consumer demand, with Mainline and Regional operations both witnessing higher demand than what was witnessed a year ago.
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The airline was able to take advantage of strong consumer demand, with Mainline and Regional operations both witnessing higher demand than what was witnessed a year ago. Our takeaway for the quarter and our outlook for the year: United served over 43 million passengers during the quarter, which is a record for any second-quarter in the airline’s history. United continued to add capacity during the quarter by adding multiple aircrafts to its fleet, and with load factor improving for the quarter, the company is well placed to achieve its revenue and earnings target for the year.
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Second Quarter Highlights: United’s revenue came in as expected, improving 6% year-on-year, to $11.4 billion. It reported a net income of $1.1 billion, representing a 54% increase YoY. United continued to add capacity during the quarter by adding multiple aircrafts to its fleet, and with load factor improving for the quarter, the company is well placed to achieve its revenue and earnings target for the year.
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6378.0
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2019-07-22 00:00:00 UTC
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3 Ways United Airlines Is Taking a Different Path
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AAL
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https://www.nasdaq.com/articles/3-ways-united-airlines-is-taking-a-different-path-2019-07-22
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Just a few years ago, United Airlines (NASDAQ: UAL) seemed permanently destined to be the least profitable of the three big U.S. legacy carriers. Delta Air Lines (NYSE: DAL) was the clear industry leader, with pre-tax margins as much as 5 percentage points higher than United, while American Airlines (NASDAQ: AAL) took second place more often than not.
However, United's management has pulled off an impressive turnaround over the past two years or so. The margin gap relative to Delta has started to shrink, and United has surpassed struggling rival American in profitability.
The company didn't just copy Delta's strategy to achieve this comeback. Instead, it has gone its own way in the hunt for stronger profitability. Let's look at three ways that United is diverging from its peers on strategy.
1. Getting a taste for used jets
Fleet strategy is one area where the carrier is carving its own path. It has shown a growing interest in buying or leasing used jets to avoid the substantial expense of new aircraft. In 2015, the airline agreed to lease up to 25 used Airbus A319s from AerCap. Most of those planes will have arrived by the end of this summer.
Last week, United announced that it had agreed to buy 19 used 737-700s between December 2019 and December 2021. Management also stated that the carrier would continue to make opportunistic acquisitions of used aircraft.
United Airlines is refreshing its fleet with a mix of new and used jets. Image source: United Airlines.
United is not exactly a pioneer with this strategy. Nearly a decade ago, Delta went on a used-aircraft acquisition spree. It bought dozens of out-of-favor MD-90s and leased 88 used Boeing 717s from Southwest Airlines. This allowed Delta to retire its oldest planes while conserving cash to pay down debt.
Yet more recently, Delta has tilted the other way, perhaps because it now has a strong balance sheet. It hasn't added a used jet to its mainline fleet in years, whereas it plans to buy more than 200 brand-new mainline jets between 2019 and 2021. As for American, the largest U.S. airline has favored new jets pretty consistently. In fact, it has added nearly 600 new aircraft to its fleet since 2014 (including regional jets).
2. Growing the 76-seat regional jet fleet is not a priority
Another way that United has diverged from its peers is in its comparatively low use of large regional jets.
Dual-class regional jets, outfitted with between 65 and 79 seats (but most commonly, 76 seats), have been an important tool for the legacy carriers in recent years. Labor costs are much lower for regional jets, but these larger models still have enough space for first-class and extra-legroom seats that fetch premium prices. However, the legacy carriers' pilot unions have negotiated very specific restrictions on how many regional jets each one may operate, in order to prevent the airlines from outsourcing even more flying to regional airlines.
American has the fewest restrictions on its regional jet fleet. Entering 2019, it had 272 regional jets outfitted with around 76 seats -- with 50 more on the way by the end of 2020 -- and 119 regional jets in the 65-70 seat range. Meanwhile, Delta reached a historic agreement with its pilots in 2012, allowing it to expand its fleet of large regional jets (most of which have 76 seats) from 255 to 325, in exchange for also growing its mainline fleet with the 88 used 110-seat 717s.
United has fewer 76-seat jets, like this one, in its regional fleet than its peers. Image source: United Airlines.
United also negotiated the right to expand its fleet of large regional jets from 255 to 325 if it adds 88 mainline aircraft in the same size range as the 717. But management has shown no interest in using this option. It has stuck with a fleet of 153 76-seat regional jets and 102 70-seaters, complemented by more than 300 50-seat jets.
Instead, it is upgrading its fleet of 50-seaters by converting some CRJ700s -- which often fly with 70 seats -- into a roomy 50-seat configuration. This means it doesn't have to operate a small mainline jet, which would have relatively high unit costs. The downside of United's unique regional jet strategy is that unit costs for its regional operations will increase.
3. Sticking with the most basic of basic economy fares
Finally, like its peers, United has introduced bare-bones basic economy fares to compete on price with ultra-low-cost carriers. But unlike Delta -- which was the first U.S. airline to test basic economy fares -- United doesn't allow customers who purchase basic economy tickets to bring full-size carry-on bags. They are only entitled to a small personal item that can fit under the seat.
American initially had a similar policy, but it reversed course after determining that the move was hurting sales. That leaves United as the only major carrier with a "bag ban" like this. Nevertheless, management seems committed to this somewhat draconian policy.
It's hard to argue with success
United executives haven't been playing it safe in their efforts to revive the company. The airline risked alienating customers with its ultra-restrictive baggage policy for basic economy tickets. Its turn toward buying more used jets could have driven up maintenance costs or hurt reliability. And outfitting jets capable of holding 70 seats with just 50 seats will put some pressure on unit costs.
But so far, these moves have paid off for shareholders. The company has returned to profit growth and seems to have the wind at its back. United is still a long way from matching Delta's level of profitability, but it is in much better shape than it was two to three years ago.
10 stocks we like better than United Airlines Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and United Airlines Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines and Southwest Airlines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Delta Air Lines (NYSE: DAL) was the clear industry leader, with pre-tax margins as much as 5 percentage points higher than United, while American Airlines (NASDAQ: AAL) took second place more often than not. Just a few years ago, United Airlines (NASDAQ: UAL) seemed permanently destined to be the least profitable of the three big U.S. legacy carriers. Labor costs are much lower for regional jets, but these larger models still have enough space for first-class and extra-legroom seats that fetch premium prices.
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Delta Air Lines (NYSE: DAL) was the clear industry leader, with pre-tax margins as much as 5 percentage points higher than United, while American Airlines (NASDAQ: AAL) took second place more often than not. But unlike Delta -- which was the first U.S. airline to test basic economy fares -- United doesn't allow customers who purchase basic economy tickets to bring full-size carry-on bags. See the 10 stocks *Stock Advisor returns as of June 1, 2019 Adam Levine-Weinberg owns shares of Delta Air Lines and Southwest Airlines and is long January 2020 $20 calls on American Airlines Group.
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Delta Air Lines (NYSE: DAL) was the clear industry leader, with pre-tax margins as much as 5 percentage points higher than United, while American Airlines (NASDAQ: AAL) took second place more often than not. Growing the 76-seat regional jet fleet is not a priority Another way that United has diverged from its peers is in its comparatively low use of large regional jets. Entering 2019, it had 272 regional jets outfitted with around 76 seats -- with 50 more on the way by the end of 2020 -- and 119 regional jets in the 65-70 seat range.
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Delta Air Lines (NYSE: DAL) was the clear industry leader, with pre-tax margins as much as 5 percentage points higher than United, while American Airlines (NASDAQ: AAL) took second place more often than not. Dual-class regional jets, outfitted with between 65 and 79 seats (but most commonly, 76 seats), have been an important tool for the legacy carriers in recent years. Entering 2019, it had 272 regional jets outfitted with around 76 seats -- with 50 more on the way by the end of 2020 -- and 119 regional jets in the 65-70 seat range.
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6379.0
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2019-07-21 00:00:00 UTC
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How to Invest in the Best Texas Stocks
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AAL
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https://www.nasdaq.com/articles/how-to-invest-in-the-best-texas-stocks-2019-07-21
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nan
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nan
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Texas isn't the biggest state in the U.S., but it has a unique combination of people, natural resources, and attitude that make it a place millions call home and millions more visit. It's also a great place to find a surprisingly wide array of investment opportunities, and investing in Texas stocks can be quite lucrative.
To get investment exposure to the best Texas stocks, you'll want to put together your own portfolio. That might seem unexpected, as Texas has a strong enough reputation to have inspired at least some investment professionals to make a go at offering ready-made investment vehicles featuring Texas-based companies. Yet as you'll see below, those efforts to make it easy for investors to pick companies with links to Texas haven't gone as well as hoped, and that makes it critical to have a good strategy for putting together your own ideal portfolio of stocks that call the Lone Star State home. We'll provide you with that kind of strategy below, but first, let's look at some of the alternative ways to invest in Texas stocks that haven't panned out.
Where are all the good Texas funds?
Given the interest that investors have in exchange-traded funds (ETF) that let you drill down on particular segments of the stock market, it's surprising that you can't simply go out and buy shares of a Texas-focused ETF. It would be relatively simple to put together an index that includes companies with certain relationships with Texas and then build an ETF to track that index.
Image source: Getty Images.
That's exactly what OOK Advisors did back in 2009, launching its Texas Exchange-Traded Fund. The financial company had opened a similar ETF based on Oklahoma stocks shortly before launching the Texas ETF, with the same general idea. The fund had a simple investment objective: match the performance of a market-capitalization-weighted index of stocks whose headquarters were located in the Lone Star State.
Choosing Texas-headquartered companies led to a huge allocation to the energy sector. At its launch, the Texas ETF had more than 60% of its assets invested in oil and gas, with the next highest weighting coming in at less than 10% for technology stocks. Yet the fund never really gained popularity among investors, and the fund provider decided to close down both of its state-specific ETFs just a year after their initial launches.
A more recent traditional mutual fund focusing on Texas stocks has had a longer history, although it hasn't been much more successful. The Texas Fund, offered through Monteagle Funds, aims to invest the bulk of its assets in companies headquartered in Texas, incorporated under Texas law, or that got at least half their revenue or profit from goods, services, or investments connected to Texas. The fund holds more than 100 stocks that meet those criteria, and although it does have a slight overweight to the energy sector, the 15% allocation there is far less out of line with the overall stock market than its ETF peer's portfolio was. Unfortunately, the fund's five-year performance numbers have been negative even in a big bull market, and so it's no big surprise that the fund has only $10.5 million in assets under management and such a high expense ratio of 1.62% that the Texas Fund just isn't a viable option for investors looking to make money on Texas companies.
5 principles for picking a top portfolio of Texas stocks
Without any good options for farming out the job of selecting the best Texas stocks for your investment portfolio, it's up to you to go through all the companies that call Texas home to find the ones that are most likely to produce top returns, valuable investment income, or whatever other goals you have for your portfolio. That can sound intimidating to many investors, especially those who are used to relying on mutual funds and ETFs to do their stock-picking work for them. But it doesn't have to be scary, and it actually gives you a lot more flexibility to tailor a combination of Texas stocks that fits best with your other investments and will help you meet your specific investing objectives.
Before you even think about what your Texas stock portfolio might look like, it's useful to make sure you know what you mean by a "Texas stock" in the first place. Some investors look at Texas stocks as being any company with a headquarters inside the Lone Star State -- even if it does most of its business outside its borders. Stock screening tools often give you the chance to search for companies based on their HQ location. Other investors are fine with companies that have headquarters outside Texas as long as they do a lot of business inside the state. For example, oil giant Chevron (NYSE: CVX) has a headquarters in California, but its purchase of Beaumont's Texaco nearly 20 years ago gave it a huge presence in the Texas market.
Below, we'll go through five basic core principles that you can use to put together a good Texas stock portfolio. Some of these principles are useful for coming up with any portfolio of stocks that targets a particular portion of the market, but a couple of them are specifically designed with Texas investments in mind.
1. Figure out how many stocks you want to follow
The first step in putting together a strong Texas stock portfolio is deciding just how big you want that portfolio to be. The ideal portfolio size will vary from person to person, but there are some general guidelines you should follow in making your own personal decision.
One consideration that's especially important has to do with how much of your money you want to dedicate to Texas stocks. If you have most of your money invested in a broader set of investments and just want to take a small portion of your investment capital to concentrate on opportunities in Texas, then it's not as important for you to have a diversified portfolio. Picking as few as one or two Texas-based companies could give you the spice to your investments that you're looking for, and you'll still have the rest of your outside investments to protect you if something goes wrong with the Texas stocks you pick.
If you want to invest most of your available money in Texas, however, then it's more important to take a prudent approach in building a diversified portfolio. Yet some people make the mistake of thinking that they have to buy dozens of stocks in order to get the diversification they need. In the process, they set themselves up for being overwhelmed with the sheer number of different businesses they have to follow, and it becomes impossible to do a good job of tracking all of their stocks and keeping up with how each one is doing individually.
Many successful investors find that tracking somewhere between eight and 12 stocks is a good middle-ground between having too few stocks to get diversified exposure and having too many to be able to keep on top of from a fundamental standpoint. Given the breadth of the Texas economy, it's easy to find a dozen or so stocks that can cover all the bases that are important to you. If you'd prefer to concentrate on a smaller number of top opportunities, then aiming for eight rather than 12 can give you a better reward if a couple of your picks end up doing especially well without leaving you overexposed if some of your choices perform poorly.
2. Decide what allocations to various sectors and industries you want
Once you've decided how many stocks you're comfortable having in your portfolio and following as their businesses develop, the next step is choosing how much of your money you want to allocate to particular industry groups and sectors of the economy. Like choosing the number of stocks, the best answer depends on the overall purpose of your Texas portfolio. If you have outside investments beyond the money you're investing in Texas stocks, then concentrating in a particular sector (energy or healthcare, for example) is a much more viable option. If you intend to put all of your investments in Texas-based companies, though, you'll want to consider more strongly putting together a portfolio of stocks in different industries.
Image source: Getty Images.
Probably the most common idea that investors who are interested in Texas have is to load up on energy companies. Within the Lone Star State, the impact of the oil and gas industry is huge. During the 1970s and 1980s, the state's economy was heavily dependent on oil and gas development. That worked well during the oil boom, but it also left the state vulnerable when that boom ended and was followed by a prolonged period of painfully low prices for energy products.
It was that experience that led to a concerted effort in Texas to diversify its economy to protect it against the volatility of the energy markets. Moreover, as primary sources of energy products got depleted, forward-thinking planners realized that a more sustainable model for economic development was crucial in order to give the state something to build on once oil and gas reserves had been completely used up.
The result was a dramatic uptick in other areas of the economy. The state's business-friendly tax structure helped to entice technology companies to set up shop, with the state's capital of Austin becoming an important hub for tech upstarts to draw from the graduate pool of some of the state's most influential colleges and universities. Dell Technologies (NYSE: DELL) came to prominence in the Austin market, and now, giants like Apple and Facebook have a presence in the Texas capital, also referred to as Silicon Hills. The healthcare industry also rose in importance, as top institutions like the MD Anderson Cancer Center in Houston gained national prominence for its oncological work, and upstart private innovators like Irving-based Reata Pharmaceuticals (NASDAQ: RETA) built up their businesses. Given the location of Texas at the entry point to the fast-growing Latin American economy, trade, commerce, and logistics became valuable businesses for the state as well.
Interestingly, it was a renaissance in the energy industry that has returned Texas to the national spotlight most recently. Advances in technology have allowed oil and gas companies to revisit assets that they'd previously thought had nothing more to produce, and key shale plays like the Eagle Ford geological formation have taken advantage of techniques that weren't available to first-generation exploration and production companies. Now, there are a wide range of companies that cater to the energy industry once again, and growth opportunities in the sector abound.
The takeaway for investors considering Texas stocks is that there's now a surprisingly wide array of companies from which those who are interested in the Lone Star State can choose. If you want to track the same sector allocations as the broader U.S. market, then you can do so without feeling as though you have to settle for second-tier companies in certain industries. It's likely that Texas stock portfolios will be at least somewhat more energy-heavy than a typical portfolio, if only because those who are interested in Texas are often drawn to the opportunities in oil and gas. Which way you go depends on where you see the greatest chance of long-term profits and how important diversification is for your overall investment objectives.
3. Find a balance between huge multinational corporations and smaller up-and-coming businesses
In addition to allocating across various sectors, investors need to decide how they want to spread out their investment capital across companies of different sizes. In general, the companies with the largest revenue will have businesses that are mature and well established, and the stock market will reward those companies with higher stock prices that translate into a larger total value for the company -- also known as market capitalization. Although the best mega-cap stocks still have sizable growth opportunities, it takes a lot more in absolute growth to move the needle in a relative way. That makes large-cap stocks -- often defined as companies valued at $10 billion or more -- useful for those seeking securities, but it can be harder for aggressive investors seeking to maximize capital appreciation to find suitable companies that fit the bill.
By contrast, smaller companies are typically a lot riskier but have dramatically more potential for long-term growth. In many sectors, you can find small companies that aren't yet profitable and are still trying to build up a sustainable level of revenue on a regular basis. If you can separate the wheat from the chaff and find the small companies that are destined to become the leaders of the future, then getting in on the ground floor can produce life-changing results for your investment portfolio. However, it's tough to identify those winners without the benefit of hindsight, and so those who invest in small-cap stocks have to accept the fact that they'll inevitably make some choices that don't pan out at all and lead to substantial losses in their portfolios.
To understand better exactly what this can look like, consider a few Texas companies that might be good prospects for a Lone Star portfolio. Two of the biggest companies with headquarters in Texas are ExxonMobil (NYSE: XOM) and AT&T (NYSE: T). Both of them have long histories of successful business and are leaders in their fields. Both have generated good long-term returns for their shareholders, and they make sizable payments of income on a regular basis to investors in the form of dividends that have grown over time. Both companies have reasonable opportunities for future growth, but their size makes it difficult for them to pursue new business niches as nimbly as smaller companies could. As a result, most investors see these stocks as solid choices that even the most conservative of investors can be comfortable owning.
On the other hand, LGI Homes (NASDAQ: LGIH) has a market cap that's less than 1% what ExxonMobil and AT&T sport, but the homebuilder has been able to put up much more impressive growth numbers. The company saw its stock nearly quadruple between 2014 and mid-2019, as total revenue soared almost tenfold in the five-year period that ended at the beginning of 2019. An emphasis on starter homes has matched up well with the current demand trends among a rising demographic of millennial shoppers, and LGI has been smart about pursuing its most lucrative business opportunities. If the housing market turns downward, then the risk for LGI is significant, but the potential reward is worth it for those willing to accept that risk.
For different investors, the best mix of big and small companies will depend on factors like overall risk tolerance, the need for current investment income, and the time horizon involved. For most people, though, having at least some exposure to both big and small companies will provide a good balance that can lead to better overall returns.
4. Look at what each company's doing both inside and outside Texas
Investing in companies that are based in Texas doesn't necessarily mean that the most important exposure that you'll have will be to the Texas economy. Many of the top companies based in the state have corporate operations that span the entire globe. Others will have limited markets that, in some cases, will be entirely within the boundaries of the Lone Star State and will therefore be more reliant on the health of the Texas economy.
As an example, let's look again at AT&T. In some ways, it's entirely an accident of geography that AT&T ended up being based in Texas, because it was the regional Bell telephone company that covered the Texas market that ended up purchasing the long-distance carrier and adopting the AT&T name. Texas has a huge population and is therefore an important source of revenue for the wireless carrier, but AT&T has nationwide scope and isn't reliant on Texas for the majority of its sales.
Meanwhile, Texas Capital Bancshares (NASDAQ: TCBI) is a good example of a smaller company that's much more dependent on the health of the state's economy. The Dallas-based financial institution doesn't exclusively do business in Texas, but it does have major locations in key Texas cities like Houston, Austin, San Antonio, and Fort Worth as well as its home city. The independent bank prides itself on serving mid-market commercial businesses and Texas entrepreneurs, and it provides substantial financing for Texas-based projects like energy development, commercial and residential construction, and mortgage finance. The bank holding company faces many of the same challenges that its peers across the country have to deal with, and macroeconomic issues like the direction of interest rates and the general creditworthiness of the overall population definitely affect Texas Capital just as much as they do other banking institutions. However, if something happens that dramatically affects the health of its Texas-based customers to a greater extent than other regions of the country see, then Texas Capital does bear the risk of having a more difficult time in overcoming those obstacles and finding ways to keep growing.
The specific objective you have for your stock portfolio will guide you in choosing whether you're most comfortable having more of one of those types than the other. But, in general, a balanced mix often makes sense for typical investors.
5. Invest in what you love about the state
Finally, many successful investors discover that when they find businesses that they can connect with on a personal level, it's much easier to have confidence in their business models. That doesn't mean that you should let your emotions get the better of you, unreasonably expecting that a Texas-based company will be able to beat out rivals from outside the Lone Star State based simply on their location.
For me, my love of Tex-Mex food led me to make an investment in restaurant chain Chuy's Holdings (NASDAQ: CHUY). This small Austin-based company served markets solely within the boundaries of Texas for the first several decades of its existence, but more recently, it decided to carry its affordable yet delicious wares outside the Lone Star State. Chuy's now has almost 100 locations as far away as Denver, Chicago, Baltimore, and Miami, and although I still live several hundred miles away from the nearest location, I still have hope that one day I'll be able to visit a nearby Chuy's as often as I did when I was in law school in Austin.
Image source: Chuy's Holdings.
Texas has enough different industries that finding something that connects with you isn't difficult. Every aspect of the energy business, from production and drilling to transportation and pipeline building to refining and marketing gasoline and other energy products, is available for investors, and you can either buy a stock like ExxonMobil that offers all of those aspects in a single investment or pick smaller companies that focus on one particular area. Tourism is a major industry, and companies like theme park operator Six Flags Entertainment (NYSE: SIX) -- headquartered in the Dallas-Fort Worth area city of Grand Prairie -- profit from its visitors both from within Texas and from elsewhere. The financial, transportation, and technological infrastructure needed to power the local economy offers numerous opportunities for investors interested in those areas, ranging from banking institutions like Texas Capital and high-tech businesses like chipmaker Cirrus Logic (NASDAQ: CRUS) to airlines like Southwest Airlines (NYSE: LUV) and American Airlines Group (NASDAQ: AAL). If you're already familiar with the products and services that the Texas-based companies you know and love offer, then it makes it that much easier to motivate yourself to find out more about their business operations and make an informed decision about whether you should invest your hard-earned money in those companies.
Find the right Texas stocks for you
So much success in investing comes from being comfortable with the investments you make and understanding what goes into the companies you choose being successful over the long run. The opportunity to buy shares of well-known, respected Texas companies can be a great way to focus your attention on investments that already have meaning for you. By following the simple principles above, you can put together a portfolio of stocks that will have good prospects to deliver long-term growth to help you reach your financial goals.
10 stocks we like better than AT&T
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and AT&T wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Apple and Chuy's Holdings. The Motley Fool owns shares of and recommends Apple, Chuy's Holdings, Facebook, and Southwest Airlines. The Motley Fool owns shares of LGI Homes and has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool recommends Cirrus Logic. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The financial, transportation, and technological infrastructure needed to power the local economy offers numerous opportunities for investors interested in those areas, ranging from banking institutions like Texas Capital and high-tech businesses like chipmaker Cirrus Logic (NASDAQ: CRUS) to airlines like Southwest Airlines (NYSE: LUV) and American Airlines Group (NASDAQ: AAL). Moreover, as primary sources of energy products got depleted, forward-thinking planners realized that a more sustainable model for economic development was crucial in order to give the state something to build on once oil and gas reserves had been completely used up. The healthcare industry also rose in importance, as top institutions like the MD Anderson Cancer Center in Houston gained national prominence for its oncological work, and upstart private innovators like Irving-based Reata Pharmaceuticals (NASDAQ: RETA) built up their businesses.
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The financial, transportation, and technological infrastructure needed to power the local economy offers numerous opportunities for investors interested in those areas, ranging from banking institutions like Texas Capital and high-tech businesses like chipmaker Cirrus Logic (NASDAQ: CRUS) to airlines like Southwest Airlines (NYSE: LUV) and American Airlines Group (NASDAQ: AAL). The Motley Fool owns shares of and recommends Apple, Chuy's Holdings, Facebook, and Southwest Airlines. The Motley Fool owns shares of LGI Homes and has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple.
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The financial, transportation, and technological infrastructure needed to power the local economy offers numerous opportunities for investors interested in those areas, ranging from banking institutions like Texas Capital and high-tech businesses like chipmaker Cirrus Logic (NASDAQ: CRUS) to airlines like Southwest Airlines (NYSE: LUV) and American Airlines Group (NASDAQ: AAL). The Texas Fund, offered through Monteagle Funds, aims to invest the bulk of its assets in companies headquartered in Texas, incorporated under Texas law, or that got at least half their revenue or profit from goods, services, or investments connected to Texas. 5 principles for picking a top portfolio of Texas stocks Without any good options for farming out the job of selecting the best Texas stocks for your investment portfolio, it's up to you to go through all the companies that call Texas home to find the ones that are most likely to produce top returns, valuable investment income, or whatever other goals you have for your portfolio.
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The financial, transportation, and technological infrastructure needed to power the local economy offers numerous opportunities for investors interested in those areas, ranging from banking institutions like Texas Capital and high-tech businesses like chipmaker Cirrus Logic (NASDAQ: CRUS) to airlines like Southwest Airlines (NYSE: LUV) and American Airlines Group (NASDAQ: AAL). 5 principles for picking a top portfolio of Texas stocks Without any good options for farming out the job of selecting the best Texas stocks for your investment portfolio, it's up to you to go through all the companies that call Texas home to find the ones that are most likely to produce top returns, valuable investment income, or whatever other goals you have for your portfolio. If you have most of your money invested in a broader set of investments and just want to take a small portion of your investment capital to concentrate on opportunities in Texas, then it's not as important for you to have a diversified portfolio.
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6380.0
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2019-07-19 00:00:00 UTC
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AAL Stock Looks Ready To Take Off After Earnings
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AAL
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https://www.nasdaq.com/articles/aal-stock-looks-ready-to-take-off-after-earnings-2019-07-19
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nan
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nan
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Shares of American Airlines (NASDAQ:) have been a big laggard in 2019. Most major stock indices are up strongly since the beginning of the year and trading near all-time highs. AAL stock, however, has basically treaded water and consolidated most of the year. Cheap comparative valuations, solid fundamentals and improving technicals make American Airlines attractive at current levels. Time to book a flight on AAL stock as it readies for lift off.
Source: Shutterstock
American Airlines will report earnings before the market opens on July 25. on $11.96 billion in revenue. AAL earnings have beaten expectations each of the past four quarters and I look for another beat this quarter as well. The company last week said TRASM (Total RevenueAvailable Seat Mile) for the second quarter would come in at 3-4% growth, higher than the previously expected 1-2% growth. This should bleed through to better earnings for AAL.
AAL stock is certainly not expensive on a valuation basis. The TTM P/E is below 8 and near the cheapest levels of the year. This is a major discount fellow competitor United Airlines (NYSE:) which has an EPS approaching 10. A slight multiple expansion for AAL stock to even 9 would provide a significant boost to the shares.
American Airlines stock is looking attractive from a technical perspective. Shares are poised for an upside breakout after holding support at the $30 area. AAL stock is back above the all-important 200 day moving average at $33.53. Both momentum and MACD remain positive. After a series of lower highs, American Airlines stock is on the cusp of making a new relative high.
American Airlines been a huge underperformer to rival Delta Airlines (NYSE:) as seen in the chart. AAL stock is up just 5% year-to-date compared to a hefty 25% gain for DAL stock in the same time period. Expect that divergence to start to converge with American being a relative outperformer to Delta over the coming weeks.
It is getting more and more difficult to find value stocks in thecurrent stock marketenvironment. Investors should consider adding AAL stock to their portfolio on any weakness. An initial price target would be the 2019 highs near the $37 area. The current dividend yield of 1.19% provides an additional income stream as well.
As of this writing, Tim Biggam did not hold a position in any of the aforementioned securities. Anyone interested in finding out more about option-based strategies or for a free trial of the can email Tim at timbiggam@gmail.com.
More From InvestorPlace
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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AAL stock, however, has basically treaded water and consolidated most of the year. Time to book a flight on AAL stock as it readies for lift off. AAL earnings have beaten expectations each of the past four quarters and I look for another beat this quarter as well.
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AAL stock, however, has basically treaded water and consolidated most of the year. Time to book a flight on AAL stock as it readies for lift off. AAL earnings have beaten expectations each of the past four quarters and I look for another beat this quarter as well.
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AAL stock is up just 5% year-to-date compared to a hefty 25% gain for DAL stock in the same time period. AAL stock, however, has basically treaded water and consolidated most of the year. Time to book a flight on AAL stock as it readies for lift off.
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AAL stock, however, has basically treaded water and consolidated most of the year. Time to book a flight on AAL stock as it readies for lift off. AAL earnings have beaten expectations each of the past four quarters and I look for another beat this quarter as well.
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6381.0
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2019-07-19 00:00:00 UTC
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Free Profit Opportunity in Southwest Stock
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AAL
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https://www.nasdaq.com/articles/free-profit-opportunity-in-southwest-stock-2019-07-19
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nan
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nan
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There was a time when the transports were the hot sector to watch on Wall Street. They served as a great barometer to the whole market. But they have long lost their leadership role except for sporadic stints. Airliner Southwest Airlines (NYSE:) stock tracks the iShares Transportation Average ETF (BATS:) very tightly. And it now sits in the middle of the six-month range.
Source: Shutterstock
This is important to note because LUV is going to deliver earnings next week. This week United Airlines (NASDAQ:) stock rallied off its earnings report, so there is definitely an opportunity for LUV stock price to do the same next week.
But I am most interested in the support below, and this will become clear at the end.
The short-term reactions to earnings are always binary, so this adds a bit of gambling flair to the trade. Even if management gives us the results ahead of time, we cannot guess how investors will react to them.
Handling UAL Stock Into Earnings
It’s all about managing expectations and we all know how things can go bad like what happened to Netflix (NASDAQ:) yesterday. The estimates create uncertainty, because if management misses them, investors sell the news even if the results are actually good in absolute terms.
But it is important to note that this binary effect is temporary. The fundamentals and the technicals will retake the reins of the Southwest stock price once the event headlines abate.
Last year, the transports fell 25% into Christmas but has recovered well since then. Like LUV, the IYT also now sits in the middle of the six month range.
So what does this mean for LUV stock price at these levels? The bulls are in control and will continue to buy the dips. After all we now know that the Fed cast its safety net back out.
So, if I’m long the stock already, then I have no reason to leave it because the fundamentals that got me into LUV have not changed. Airlines have developed a new way of doing business in the U.S. that has almost erased the old stigma of shoddy operations.
I am flying today and I can assure you that I paid for many extra fees that didn’t exist just a couple years ago. Critics point out that they lack overall pricing power but they are making up for it with additional fees from every angle.
This is all to say that the Southwest team is executing on plans well enough to warrant the current valuation.
Technically speaking, LUV stock has been setting higher lows while knocking at the $54 per share neckline. It has also bounced off of $48-per-share support zone four times, with the exception of a deeper dip into the Christmas market-wide debacle.
So the bulls have the benefit of solid support below while attacking a resistance level. Often times the bears get tired of defending the resistance and the bulls overshoot higher. In this case, the outside target would be $58 per share with resistance at $56.
Some investors prefer to hold stocks for the very long term. And for those, the $58 resistance won’t matter. For the faster traders, $58 is a target area to exit the trade, or at least book some profit.
However, if the bulls are able to break through that resistance then it becomes the next upside opportunity to extend the rally and set new all-time highs. There would obviously be resistance at $64 in that scenario.
The Bottom Line on Southwest Stock
While owning shares of LUV is a legitimate trade opportunity, I prefer to use options in my trading. So in this case, since we noted that that there is solid support below, I prefer selling downside puts into what others fear. This way I can create income without any money out of pocket.
For example, I can sell the Dec $45 put and collect $1 for it. All I need to profit is for the LUV stock price to stay above that level. Otherwise I own the shares at $45 and break even at $44 per share.
Compare this with owning shares now and risking my money with no margin for error. By selling the puts I create a 13% moat around my risk. And I don’t even need a rally to win.
Nicolas Chahine is the managing director of . As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room free here.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Handling UAL Stock Into Earnings It’s all about managing expectations and we all know how things can go bad like what happened to Netflix (NASDAQ:) yesterday. The estimates create uncertainty, because if management misses them, investors sell the news even if the results are actually good in absolute terms. I am flying today and I can assure you that I paid for many extra fees that didn’t exist just a couple years ago.
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This week United Airlines (NASDAQ:) stock rallied off its earnings report, so there is definitely an opportunity for LUV stock price to do the same next week. Some investors prefer to hold stocks for the very long term. The Bottom Line on Southwest Stock While owning shares of LUV is a legitimate trade opportunity, I prefer to use options in my trading.
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This week United Airlines (NASDAQ:) stock rallied off its earnings report, so there is definitely an opportunity for LUV stock price to do the same next week. Technically speaking, LUV stock has been setting higher lows while knocking at the $54 per share neckline. The Bottom Line on Southwest Stock While owning shares of LUV is a legitimate trade opportunity, I prefer to use options in my trading.
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This week United Airlines (NASDAQ:) stock rallied off its earnings report, so there is definitely an opportunity for LUV stock price to do the same next week. So the bulls have the benefit of solid support below while attacking a resistance level. Some investors prefer to hold stocks for the very long term.
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6382.0
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2019-07-19 00:00:00 UTC
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Strong Passenger Flow Will Boost Delta Airlines' Profits For The Year
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AAL
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https://www.nasdaq.com/articles/strong-passenger-flow-will-boost-delta-airlines-profits-for-the-year-2019-07-19
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nan
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nan
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Delta Airlines (NYSE: DAL) is a major US airline company that serves both domestic and international routes and operates 5,400 flights to 325 destinations in 54 countries. Delta reported better-than-expected results for the second quarter late last week thanks to higher passenger flow for the quarter. With Delta witnessing fewer delays for the quarter, the airline also reported a notable improvement in operational efficiency. Per Trefis, Delta’s shares have a fair value of $62, which is in line with the current market price. Our interactive dashboard about Delta Airlines’ Earnings highlights changes to key metrics for the company and summarizes our outlook for the year.
Summarizing Delta’s Q2 2019 Results
Revenue rose to $12.5 billion and came in 20% higher than the figure for Q2 2018. Revenues largely rose on the back of three key factors:
Firstly, ticket prices rose across the industry as cancellations stemming from the 737-MAX grounding took hold. Delta, which does not fly any 737-MAX, was able to take advantage of the grounding by increasing its capacity and flight frequency.
Secondly, fewer flights meant higher passenger-flow for Delta. The result was a much higher revenue print than analysts had expected. It should be noted that we expect this trend to continue for a couple of quarters, or at least until the 737-MAX issue is resolved, or alternatively, regional competitors can find alternative aircraft’s to service routes that the 737-MAX had previously services.
Lastly, Delta’s mainline division enjoyed a higher unit revenue as it saw more passengers choosing its premium segment. The airline has been working to improve this segment, as it looks to improve revenues and margins. The strategy clearly seems to be working, and we expect that the premium segment will continue to play a key part in Delta’s overall strategy to increase profitability in the long run.
Both net income and earnings per share rose during the quarter.
Key metrics
RASM (Revenue per Average Seat Mile), increased by 3.8% for the quarter as ticket prices increased
Load Factor improved to record levels.
Delta also witnessed a reduction of 1.4% in unit costs thanks to improved operational efficiency and lower fuel costs.
Delta’s fuel costs were $2.08 per gallon for the quarter – slightly lower than the figure a year ago.
What’s our outlook for the rest of the year?
We expect revenues for full-year 2019 to be $47.8 billion. Tailwinds for Delta include higher ticket prices (stemming from flight cancellations); higher unit revenues, as more people opt for the premium segment; and higher capacity.
Furthermore, Delta has plans to add capacity both to its mainline routes and its regional service.
This combined with our expectation of increased unit revenue as a result of higher premium passenger footfall, should help drive earnings per share. Our full-year outlook for earnings per share comes in at $6.30 a share.
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams| Product, R&D, and Marketing Teams
All Trefis Data
Like our charts? Explore example interactive dashboards and create your own
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Our interactive dashboard about Delta Airlines’ Earnings highlights changes to key metrics for the company and summarizes our outlook for the year. Lastly, Delta’s mainline division enjoyed a higher unit revenue as it saw more passengers choosing its premium segment. This combined with our expectation of increased unit revenue as a result of higher premium passenger footfall, should help drive earnings per share.
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Our interactive dashboard about Delta Airlines’ Earnings highlights changes to key metrics for the company and summarizes our outlook for the year. Delta also witnessed a reduction of 1.4% in unit costs thanks to improved operational efficiency and lower fuel costs. Tailwinds for Delta include higher ticket prices (stemming from flight cancellations); higher unit revenues, as more people opt for the premium segment; and higher capacity.
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Lastly, Delta’s mainline division enjoyed a higher unit revenue as it saw more passengers choosing its premium segment. Tailwinds for Delta include higher ticket prices (stemming from flight cancellations); higher unit revenues, as more people opt for the premium segment; and higher capacity. This combined with our expectation of increased unit revenue as a result of higher premium passenger footfall, should help drive earnings per share.
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Our interactive dashboard about Delta Airlines’ Earnings highlights changes to key metrics for the company and summarizes our outlook for the year. Summarizing Delta’s Q2 2019 Results Revenue rose to $12.5 billion and came in 20% higher than the figure for Q2 2018. This combined with our expectation of increased unit revenue as a result of higher premium passenger footfall, should help drive earnings per share.
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6383.0
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2019-07-17 00:00:00 UTC
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Noteworthy Wednesday Option Activity: AAL, EBAY, UNFI
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AAL
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https://www.nasdaq.com/articles/noteworthy-wednesday-option-activity%3A-aal-ebay-unfi-2019-07-17
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nan
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nan
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Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 31,271 contracts has been traded thus far today, a contract volume which is representative of approximately 3.1 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 54.5% of AAL's average daily trading volume over the past month, of 5.7 million shares. Particularly high volume was seen for the $30 strike call option expiring July 26, 2019, with 2,502 contracts trading so far today, representing approximately 250,200 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange:
eBay Inc. (Symbol: EBAY) options are showing a volume of 40,418 contracts thus far today. That number of contracts represents approximately 4.0 million underlying shares, working out to a sizeable 53.4% of EBAY's average daily trading volume over the past month, of 7.6 million shares. Especially high volume was seen for the $40 strike put option expiring July 19, 2019, with 3,904 contracts trading so far today, representing approximately 390,400 underlying shares of EBAY. Below is a chart showing EBAY's trailing twelve month trading history, with the $40 strike highlighted in orange:
And United Natural Foods Inc. (Symbol: UNFI) options are showing a volume of 6,851 contracts thus far today. That number of contracts represents approximately 685,100 underlying shares, working out to a sizeable 52.6% of UNFI's average daily trading volume over the past month, of 1.3 million shares. Particularly high volume was seen for the $10 strike put option expiring August 16, 2019, with 4,040 contracts trading so far today, representing approximately 404,000 underlying shares of UNFI. Below is a chart showing UNFI's trailing twelve month trading history, with the $10 strike highlighted in orange:
For the various different available expirations for AAL options, EBAY options, or UNFI options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $30 strike call option expiring July 26, 2019, with 2,502 contracts trading so far today, representing approximately 250,200 underlying shares of AAL. Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 31,271 contracts has been traded thus far today, a contract volume which is representative of approximately 3.1 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 54.5% of AAL's average daily trading volume over the past month, of 5.7 million shares.
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Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange: eBay Inc. (Symbol: EBAY) options are showing a volume of 40,418 contracts thus far today. Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 31,271 contracts has been traded thus far today, a contract volume which is representative of approximately 3.1 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 54.5% of AAL's average daily trading volume over the past month, of 5.7 million shares.
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Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 31,271 contracts has been traded thus far today, a contract volume which is representative of approximately 3.1 million underlying shares (given that every 1 contract represents 100 underlying shares). Below is a chart showing AAL's trailing twelve month trading history, with the $30 strike highlighted in orange: eBay Inc. (Symbol: EBAY) options are showing a volume of 40,418 contracts thus far today. That number works out to 54.5% of AAL's average daily trading volume over the past month, of 5.7 million shares.
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Particularly high volume was seen for the $30 strike call option expiring July 26, 2019, with 2,502 contracts trading so far today, representing approximately 250,200 underlying shares of AAL. Below is a chart showing UNFI's trailing twelve month trading history, with the $10 strike highlighted in orange: For the various different available expirations for AAL options, EBAY options, or UNFI options, visit StockOptionsChannel.com. Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 31,271 contracts has been traded thus far today, a contract volume which is representative of approximately 3.1 million underlying shares (given that every 1 contract represents 100 underlying shares).
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6384.0
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2019-07-15 00:00:00 UTC
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American Airlines and United Airlines Cancel More Boeing 737 MAX Flights
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AAL
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https://www.nasdaq.com/articles/american-airlines-and-united-airlines-cancel-more-boeing-737-max-flights-2019-07-16
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nan
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nan
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Late last month, Boeing (NYSE: BA) acknowledged a new problem with its troubled 737 MAX aircraft family. Boeing is currently working on a fix for this data processing issue, which is tangentially related to the initial software flaws that led to two fatal crashes over the past year.
However, the latest software update won't be ready until September. Next, Boeing will need to satisfy the FAA and a host of other regulators worldwide that the 737 MAX is finally safe to fly. Even after that, it will take at least a month for airlines to complete required maintenance and training activities so that they can return their 737 MAX fleets to service.
As a result, American Airlines (NASDAQ: AAL) and United Airlines (NASDAQ: UAL) both extended their 737 MAX flight cancellations recently. And Southwest Airlines (NYSE: LUV) is sure to follow suit before long.
The 737 MAX grounding gets worse at United Airlines
When the Boeing 737 MAX was grounded, United Airlines had just 14 in its fleet, significantly fewer than either American or Southwest. This meant that the carrier was able to keep flight cancellations to a minimum during the spring, mainly by substituting other aircraft types for the 737 MAX.
The 737 MAX grounding is starting to have a bigger impact on United Airlines. Image source: United Airlines.
At first, United Airlines had more aggressive targets for putting the 737 MAX back into service than its rivals. Until late May, the carrier still had the 737 MAX returning to its flight schedule in early July. More recently, it had extended the cancellations into early September.
Last week, United scrubbed all 737 MAX flights through Nov. 3, giving it the latest target for putting the type back into service among the three U.S. airlines that operate it.
As the 737 MAX grounding has dragged on, the impact on United customers has worsened. The airline was supposed to grow its 737 MAX fleet from 14 as of mid-March to 30 by the end of September. Thus, United has had to cancel about 2,100 flights in September and 2,900 flights in October, compared to fewer than 1,400 in July.
American Airlines follows suit
As of last Friday, American Airlines was still saying that it had no updates to share regarding its plan to reintroduce the 737 MAX in early September. Not surprisingly, the carrier bowed to the inevitable over the weekend. American extended its flight cancellations -- approximately 115 per day -- through Nov. 2.
American Airlines has canceled all 737 MAX flights through early November. Image source: American Airlines.
With the 737 MAX grounding lasting far longer than initially expected, American Airlines also recently suspended a route for the first time during the crisis. The airline temporarily stopped flying from Dallas-Fort Worth to Oakland on July 6, due to its aircraft shortage. Customers can still fly nonstop from Dallas to the two other Bay Area airports or to Oakland via American's Phoenix hub.
Southwest Airlines, which has been relying on the 737 MAX for a much greater proportion of its daily schedule, has suspended more than a dozen routes, according to The Points Guy. This includes a mix of routes with heavy competition, low-traffic routes, and longer-haul flights that use too much aircraft time to be worthwhile right now.
Expect even more flight cancellations ahead
As of now, Southwest Airlines has only canceled its 737 MAX flights through Oct. 1, but there is virtually no chance that the aircraft will be ready to return to service by then. Even United Airlines and American Airlines may need to cancel more flights if any new problems are discovered or if the FAA waits for an international consensus to develop before recertifying the 737 MAX.
In fact, a growing number of industry officials believe the Boeing 737 MAX grounding could continue until January 2020, according to The Wall Street Journal. That would force Southwest, American, and United to cancel tens of thousands of additional flights.
Airline officials and Boeing will surely try to get the 737 MAX operational earlier than that, to meet holiday-season demand. But whether or not that proves feasible, there is likely to be at least one more round of flight cancellations for all three airlines, extending the pain from the Boeing 737 MAX grounding.
10 stocks we like better than Boeing
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Boeing wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Southwest Airlines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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As a result, American Airlines (NASDAQ: AAL) and United Airlines (NASDAQ: UAL) both extended their 737 MAX flight cancellations recently. Boeing is currently working on a fix for this data processing issue, which is tangentially related to the initial software flaws that led to two fatal crashes over the past year. Last week, United scrubbed all 737 MAX flights through Nov. 3, giving it the latest target for putting the type back into service among the three U.S. airlines that operate it.
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As a result, American Airlines (NASDAQ: AAL) and United Airlines (NASDAQ: UAL) both extended their 737 MAX flight cancellations recently. The 737 MAX grounding gets worse at United Airlines When the Boeing 737 MAX was grounded, United Airlines had just 14 in its fleet, significantly fewer than either American or Southwest. With the 737 MAX grounding lasting far longer than initially expected, American Airlines also recently suspended a route for the first time during the crisis.
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As a result, American Airlines (NASDAQ: AAL) and United Airlines (NASDAQ: UAL) both extended their 737 MAX flight cancellations recently. The 737 MAX grounding gets worse at United Airlines When the Boeing 737 MAX was grounded, United Airlines had just 14 in its fleet, significantly fewer than either American or Southwest. Even United Airlines and American Airlines may need to cancel more flights if any new problems are discovered or if the FAA waits for an international consensus to develop before recertifying the 737 MAX.
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As a result, American Airlines (NASDAQ: AAL) and United Airlines (NASDAQ: UAL) both extended their 737 MAX flight cancellations recently. The 737 MAX grounding gets worse at United Airlines When the Boeing 737 MAX was grounded, United Airlines had just 14 in its fleet, significantly fewer than either American or Southwest. Until late May, the carrier still had the 737 MAX returning to its flight schedule in early July.
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6385.0
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2019-07-12 00:00:00 UTC
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AAL Makes Bullish Cross Above Critical Moving Average
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AAL
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https://www.nasdaq.com/articles/aal-makes-bullish-cross-above-critical-moving-average-2019-07-12
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nan
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nan
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In trading on Friday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $33.72, changing hands as high as $33.90 per share. American Airlines Group Inc shares are currently trading up about 2.3% on the day. The chart below shows the one year performance of AAL shares, versus its 200 day moving average:
Looking at the chart above, AAL's low point in its 52 week range is $27.02 per share, with $43.89 as the 52 week high point — that compares with a last trade of $33.78.
Click here to find out which 9 other stocks recently crossed above their 200 day moving average »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Friday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $33.72, changing hands as high as $33.90 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $27.02 per share, with $43.89 as the 52 week high point — that compares with a last trade of $33.78. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Friday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $33.72, changing hands as high as $33.90 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $27.02 per share, with $43.89 as the 52 week high point — that compares with a last trade of $33.78. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Friday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $33.72, changing hands as high as $33.90 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $27.02 per share, with $43.89 as the 52 week high point — that compares with a last trade of $33.78. Click here to find out which 9 other stocks recently crossed above their 200 day moving average » The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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In trading on Friday, shares of American Airlines Group Inc (Symbol: AAL) crossed above their 200 day moving average of $33.72, changing hands as high as $33.90 per share. The chart below shows the one year performance of AAL shares, versus its 200 day moving average: Looking at the chart above, AAL's low point in its 52 week range is $27.02 per share, with $43.89 as the 52 week high point — that compares with a last trade of $33.78. American Airlines Group Inc shares are currently trading up about 2.3% on the day.
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6386.0
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2019-07-12 00:00:00 UTC
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Big Q2 Beat in Store for United Airlines Stock
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AAL
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https://www.nasdaq.com/articles/big-q2-beat-in-store-for-united-airlines-stock-2019-07-12
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nan
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nan
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In many cases, earnings season for airliners is a straightforward affair. If the economy is doing well, more people are motivated to travel, while the opposite is also true. However, with United Airlines (NASDAQ:) set to release its second quarter 2019 results, everyone has the same question: how will Boeing’s (NYSE:) 737 Max jetliner impact United Airlines stock?
Source: Shutterstock
It’s a line of thinking that no prospective buyer should ignore. Although UAL stock is on the verge of breaking into double-digit returns for the year, shares have disappointed over the trailing 52-week period. After all, the broader benchmark Dow Jones Industrial Average is up over 17% during the same timeframe.
Plus, United stock has merely bounced up and down a sideways consolidation pattern since September of last year. Thus, for UAL earnings, investors will be looking for signs that lean shares in one direction or the other.
Fortunately for investors interested in the friendly skies, United Airlines stock should perform admirably. That’s because competitor Delta Air Lines (NYSE:) laid down the blueprint for the rest of the sector.
Delta Delivers Big Beat, Boding Well for UAL Stock
On Thursday morning before the opening bell, Delta released its Q2 earnings report. For anyone bullish on DAL, it was exactly what they wanted to hear. But the news is especially pertinent for stakeholders of UAL stock for obvious and not-so-obvious reasons.
Against a Wall Street consensus target calling for earnings per share of $2.27, Delta reported $2.35. On the revenue front, the airliner rang up $12.49 billion, matching the consensus estimate. That tally also represented a new .
Keep in mind that Delta produced record revenues in the as well. Thus, the news gets better by association for United Airlines stock, and the upcoming UAL earnings.
Not only that, Delta is somewhat similar to UAL relative to the Boeing 737 Max crisis. Part of the reason why Delta performed so well in Q2 was that it 737 Max planes; thus, it didn’t cancel any flights. Although United can’t say the same, it only has nine 737 Max 9-series planes, not the 8-series that was involved in two high-profile tragedies.
Other airliners, such as Southwest Airlines (NYSE:) and American Airlines (NASDAQ:), own considerably more of the maligned jet. Therefore, I expect United Airlines stock to perform reasonably well following the UAL earnings: it’s simply not as levered to the 737-related crisis.
Record Air Travel and Upcoming UAL Earnings Report
The Street has some ambitious targets for UAL stock for Q2. On the profitability front, analysts estimate EPS to come in at . In the year-ago quarter, United brought in EPS of $3.23.
For revenue, analysts anticipate United to ring up . In Q2 2018, the company delivered just under $9.9 billion.
Again, this is a sizable step up from just a year ago amid a complicated economic picture. But what’s not complicated is demand. According to travel experts, airliners will enjoy an , even more so than last year’s peak summer season.
Specifically, forecasts call for over 257 million people to traverse American airspace between June 1 and August 31. If so, this would represent a 3.4% lift from the same period in 2018. Naturally, such robust demand plays into United Airlines stock.
Sure, most of the aforementioned timeframe doesn’t cover Q2. However, from Delta’s Q1 earnings report, we know that this uptick in passenger volume is no fluke. It has been building for some time. Thus, UAL stock should see some uptick associated with steadily rising demand.
Moreover, other indicators confirm Americans want to travel. Recently, we witnessed a in road-going traffic for the Memorial Day and Independence Day holidays. And fuel prices have declined noticeably from the same time one year ago: this adds more funds to travelers’ pockets, and pads the bottom line for United stock.
One Cautionary Note on United Airlines Stock
Based on the broader fundamental factors affecting the airliner industry, I’m almost certain that United will produce a solid beat. And yes, that would imply that United Airlines stock ticks higher.
However, I’d also take a conservative approach here. At the end of the day, the demand surge within this industry comes from a robust labor market. But that’s not guaranteed to sustain itself, especially with geopolitical uncertainties and the U.S.-China trade war.
Typically, the markets don’t like ambiguous signals, especially large-scale ones like what we’re seeing. So my idea is this: if you like United stock, take a modest position now. But be prepared to react if economic metrics start souring.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Although UAL stock is on the verge of breaking into double-digit returns for the year, shares have disappointed over the trailing 52-week period. Therefore, I expect United Airlines stock to perform reasonably well following the UAL earnings: it’s simply not as levered to the 737-related crisis. And fuel prices have declined noticeably from the same time one year ago: this adds more funds to travelers’ pockets, and pads the bottom line for United stock.
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Against a Wall Street consensus target calling for earnings per share of $2.27, Delta reported $2.35. Thus, the news gets better by association for United Airlines stock, and the upcoming UAL earnings. Record Air Travel and Upcoming UAL Earnings Report The Street has some ambitious targets for UAL stock for Q2.
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However, with United Airlines (NASDAQ:) set to release its second quarter 2019 results, everyone has the same question: how will Boeing’s (NYSE:) 737 Max jetliner impact United Airlines stock? Thus, the news gets better by association for United Airlines stock, and the upcoming UAL earnings. One Cautionary Note on United Airlines Stock Based on the broader fundamental factors affecting the airliner industry, I’m almost certain that United will produce a solid beat.
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However, with United Airlines (NASDAQ:) set to release its second quarter 2019 results, everyone has the same question: how will Boeing’s (NYSE:) 737 Max jetliner impact United Airlines stock? Thus, the news gets better by association for United Airlines stock, and the upcoming UAL earnings. Record Air Travel and Upcoming UAL Earnings Report The Street has some ambitious targets for UAL stock for Q2.
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6387.0
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2019-07-10 00:00:00 UTC
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American Airlines Raises Guidance Despite 737 MAX Hit
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AAL
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https://www.nasdaq.com/articles/american-airlines-raises-guidance-despite-737-max-hit-2019-07-11
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nan
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nan
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Last week, Delta Air Lines boosted its second-quarter guidance, assisted by the grounding of the Boeing (NYSE: BA) 737 MAX. 737 MAX operators like American Airlines (NASDAQ: AAL) and Southwest Airlines (NYSE: LUV) have been forced to cancel more than 100 flights a day due to having dozens of aircraft out of service. That's leading to packed planes and higher fares for air travel, particularly in the domestic market.
The Boeing 737 MAX grounding and the resulting capacity constraints may even be helping some 737 MAX customers. On Wednesday morning, American Airlines lifted its guidance for the second quarter, notwithstanding the impact of the 737 MAX grounding.
American Airlines boosted its second-quarter RASM forecast this week. Image source: American Airlines.
Unit revenue growth firms up
In late April, American Airlines projected that revenue per available seat mile (RASM) would increase 1% to 3% in the second quarter. That would have represented a solid acceleration in its unit revenue momentum after RASM inched up just 0.5% year over year in Q1.
At the time, management warned that the carrier's flight cancellations wouldn't necessarily boost RASM. While slower capacity growth is usually positive for unit revenue, American Airlines executives stated that the last-minute nature of some of the flight cancellations meant that the airline would have fewer seats available for lucrative close-in bookings.
However, it looks like management exaggerated the impact of this issue. American Airlines now expects to report a 3% to 4% RASM gain for the second quarter, exceeding the high end of its initial guidance range. The carrier raised its unit revenue outlook despite cancelling even more flights than expected -- due in part to rising labor tensions involving its mechanics -- and falling short of its target for cargo revenue by $35 million.
American Airlines avoids a big unit cost spike
Southwest Airlines, which has the largest 737 MAX fleet in the world (and thus had to cancel the most flights over the past few months), is on track to report an even bigger Q2 unit revenue increase. Last month, the low-fare carrier estimated that RASM would rise 6.5% to 7.5% for the quarter. However, Southwest also expects nonfuel unit costs to surge 11.5% to 12.5% year over year, due in large part to the volume of flight cancellations. This will severely constrain Southwest Airlines' profitability for the second quarter.
By contrast, American Airlines did a pretty good job of managing its costs last quarter despite the wave of flight cancellations. Nonfuel unit costs are on track to rise 4.5% to 5.5% year over year.
On the flip side, American reduced its fuel cost guidance by $0.02 per gallon in its investor update this week. It now expects to report fuel costs between $2.12 per gallon and $2.17 per gallon for the second quarter, down from $2.24 per gallon a year ago.
The net result is that American Airlines was able to raise its adjusted pre-tax margin forecast from a range of 7% to 9% previously to a new range of 8.5% to 9.5%. Its adjusted pre-tax margin in the prior-year period was 8.6%. Based on the midpoint of this new guidance range, American's EPS will come in around $1.83 for Q2, up from $1.63 a year ago and well ahead of the average analyst estimate of $1.69.
A good sign for the third quarter
The Boeing 737 MAX grounding is likely to continue well into the fall, causing capacity to decline again at American Airlines and Southwest Airlines during the third quarter. However, American's solid Q2 results show that this isn't a very big problem for the carrier.
After all, American Airlines is poised to report a double-digit increase in EPS for the second quarter, despite an estimated $185 million pre-tax profit headwind related to the grounding. In reality, the unit revenue benefit of restraining capacity may be offsetting the costs of the 737 MAX grounding. Moreover, the carrier may receive compensation from Boeing at some point down the line, most likely through discounts on future aircraft purchases.
For the third quarter, American adjusted its flight schedule further in advance, giving it more of an opportunity to optimize its revenue management and cost structure. This could lead to even greater margin expansion -- and another earnings beat -- in the quarter ahead. With American Airlines stock trading at a very modest valuation, that could send the shares soaring in the coming months.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines and Southwest Airlines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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737 MAX operators like American Airlines (NASDAQ: AAL) and Southwest Airlines (NYSE: LUV) have been forced to cancel more than 100 flights a day due to having dozens of aircraft out of service. American Airlines now expects to report a 3% to 4% RASM gain for the second quarter, exceeding the high end of its initial guidance range. After all, American Airlines is poised to report a double-digit increase in EPS for the second quarter, despite an estimated $185 million pre-tax profit headwind related to the grounding.
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737 MAX operators like American Airlines (NASDAQ: AAL) and Southwest Airlines (NYSE: LUV) have been forced to cancel more than 100 flights a day due to having dozens of aircraft out of service. Last week, Delta Air Lines boosted its second-quarter guidance, assisted by the grounding of the Boeing (NYSE: BA) 737 MAX. The carrier raised its unit revenue outlook despite cancelling even more flights than expected -- due in part to rising labor tensions involving its mechanics -- and falling short of its target for cargo revenue by $35 million.
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737 MAX operators like American Airlines (NASDAQ: AAL) and Southwest Airlines (NYSE: LUV) have been forced to cancel more than 100 flights a day due to having dozens of aircraft out of service. American Airlines avoids a big unit cost spike Southwest Airlines, which has the largest 737 MAX fleet in the world (and thus had to cancel the most flights over the past few months), is on track to report an even bigger Q2 unit revenue increase. A good sign for the third quarter The Boeing 737 MAX grounding is likely to continue well into the fall, causing capacity to decline again at American Airlines and Southwest Airlines during the third quarter.
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737 MAX operators like American Airlines (NASDAQ: AAL) and Southwest Airlines (NYSE: LUV) have been forced to cancel more than 100 flights a day due to having dozens of aircraft out of service. Last week, Delta Air Lines boosted its second-quarter guidance, assisted by the grounding of the Boeing (NYSE: BA) 737 MAX. American Airlines avoids a big unit cost spike Southwest Airlines, which has the largest 737 MAX fleet in the world (and thus had to cancel the most flights over the past few months), is on track to report an even bigger Q2 unit revenue increase.
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6388.0
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2019-07-10 00:00:00 UTC
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5 Top Stock Trades for Thursday: AMD, DAL, C, BB
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AAL
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https://www.nasdaq.com/articles/5-top-stock-trades-for-thursday%3A-amd-dal-c-bb-2019-07-10
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nan
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nan
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Federal Reserve Chair Jerome Powell talked about an accommodative stance, which to investors’ ears sounds a lot like “rate cut.” That got equities moving higher in morning trade, where the S&P 500 cracked 3,000 for the first time. However, bulls were not able to maintain their sugar high into the afternoon, with stocks giving up some of those gains. Let’s take a look at a few top stock trades.
Top Stock Trades for Tomorrow #1: Advanced Micro Devices
The burst higher in Advanced Micro Devices (NASDAQ:) should be no surprise to InvestorPlace readers, as we lined this one up a few days ago as a solid trade. And for investors, they were able to in less than a month.
Now what?
Shares don’t look to be tiring much, but they are running into resistance in this $33 to $34 area. If it can push through, rallying up to $35+ for instance, then I would look to see if this prior resistance zone can begin acting as support. If that plays out, it bodes well for higher prices.
Below $33 and bulls may have to wait for a retest of the 20-day moving average and/or uptrend support.
Top Stock Trades for Tomorrow #2: Citigroup
For the last 18 months, the $71.50 to $72 area has been acting as resistance for Citigroup (NYSE:). That’s been the ceiling this whole month, even after Citigroup raised its buyback and dividend.
Bulls are hoping shares can breakout and push through this mark. If it does, a run to channel resistance (blue line) near $74 is on the table. That will also put C stock near its 52-week highs around $73.73.
Should shares pullback, see if C stock finds support at its 20-day moving average. Below and its 50-day moving average comes into play.
Top Stock Trades for Tomorrow #3: BlackBerry
The action in BlackBerry (NYSE:) has been pretty ugly. At the end of June, shares raced up to $9, but were swiftly batted lower by the 50-week and 200-week moving averages.
We and with BB stock now flirting with last month’s lows, $6.50 range support looks to be a possibility. See if the stock hold this $7.10-ish area. Below and it’s a no-touch until support comes into play.
Top Stock Trades for Tomorrow #4: WD-40
Shares of WD-40 Company (NYSE:) jumped higher on better-than-expected earnings results, up more than 10% at one point.
The stock backed off the $180 level, which isn’t too surprising considering how much resistance seems to be sitting between $180 and $182.50. On the plus side, WDFC is now above all three major moving averages and is responding well to its earnings report.
I would be more inclined to sell the rally into $182.50 if it gets there this week. Otherwise, let’s see where this stock bases from here. A breakout over $183 could trigger a move to the highs near $186.18.
Top Stock Trades for Tomorrow #5: Delta Air Lines
Delta Air Lines (NYSE:) is set to report earnings on Thursday morning, and optimism is high heading into the report. Management recently gave a positive update, and American Airlines (NYSE:) issued positive data on Wednesday.
This $58 to $59 area has been resistance for Delta, so it would be extremely encouraging to see it hold as support going forward. Of course, earnings will play a large role in the upcoming action.
The options market is pricing in a ~3.5% move by Friday’s close, so it will be interesting to see if it can hold this mark. If it doesn’t, let’s see if either the 10-week or the 50-week moving average can support it.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Federal Reserve Chair Jerome Powell talked about an accommodative stance, which to investors’ ears sounds a lot like “rate cut.” That got equities moving higher in morning trade, where the S&P 500 cracked 3,000 for the first time. Top Stock Trades for Tomorrow #1: Advanced Micro Devices The burst higher in Advanced Micro Devices (NASDAQ:) should be no surprise to InvestorPlace readers, as we lined this one up a few days ago as a solid trade. Top Stock Trades for Tomorrow #4: WD-40 Shares of WD-40 Company (NYSE:) jumped higher on better-than-expected earnings results, up more than 10% at one point.
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Top Stock Trades for Tomorrow #1: Advanced Micro Devices The burst higher in Advanced Micro Devices (NASDAQ:) should be no surprise to InvestorPlace readers, as we lined this one up a few days ago as a solid trade. Top Stock Trades for Tomorrow #3: BlackBerry The action in BlackBerry (NYSE:) has been pretty ugly. Top Stock Trades for Tomorrow #5: Delta Air Lines Delta Air Lines (NYSE:) is set to report earnings on Thursday morning, and optimism is high heading into the report.
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Top Stock Trades for Tomorrow #1: Advanced Micro Devices The burst higher in Advanced Micro Devices (NASDAQ:) should be no surprise to InvestorPlace readers, as we lined this one up a few days ago as a solid trade. Top Stock Trades for Tomorrow #2: Citigroup For the last 18 months, the $71.50 to $72 area has been acting as resistance for Citigroup (NYSE:). Top Stock Trades for Tomorrow #5: Delta Air Lines Delta Air Lines (NYSE:) is set to report earnings on Thursday morning, and optimism is high heading into the report.
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And for investors, they were able to in less than a month. Top Stock Trades for Tomorrow #2: Citigroup For the last 18 months, the $71.50 to $72 area has been acting as resistance for Citigroup (NYSE:). Top Stock Trades for Tomorrow #5: Delta Air Lines Delta Air Lines (NYSE:) is set to report earnings on Thursday morning, and optimism is high heading into the report.
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6389.0
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2019-07-10 00:00:00 UTC
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Noteworthy Wednesday Option Activity: AAL, LRCX, QCOM
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AAL
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https://www.nasdaq.com/articles/noteworthy-wednesday-option-activity%3A-aal-lrcx-qcom-2019-07-10
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nan
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nan
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Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 37,383 contracts has been traded thus far today, a contract volume which is representative of approximately 3.7 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 66% of AAL's average daily trading volume over the past month, of 5.7 million shares. Particularly high volume was seen for the $34 strike call option expiring July 12, 2019, with 3,264 contracts trading so far today, representing approximately 326,400 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange:
Lam Research Corp (Symbol: LRCX) saw options trading volume of 9,596 contracts, representing approximately 959,600 underlying shares or approximately 52.1% of LRCX's average daily trading volume over the past month, of 1.8 million shares. Particularly high volume was seen for the $180 strike put option expiring July 19, 2019, with 1,189 contracts trading so far today, representing approximately 118,900 underlying shares of LRCX. Below is a chart showing LRCX's trailing twelve month trading history, with the $180 strike highlighted in orange:
And Qualcomm Inc (Symbol: QCOM) saw options trading volume of 56,727 contracts, representing approximately 5.7 million underlying shares or approximately 49.8% of QCOM's average daily trading volume over the past month, of 11.4 million shares. Particularly high volume was seen for the $76 strike put option expiring July 12, 2019, with 3,318 contracts trading so far today, representing approximately 331,800 underlying shares of QCOM. Below is a chart showing QCOM's trailing twelve month trading history, with the $76 strike highlighted in orange:
For the various different available expirations for AAL options, LRCX options, or QCOM options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $34 strike call option expiring July 12, 2019, with 3,264 contracts trading so far today, representing approximately 326,400 underlying shares of AAL. Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 37,383 contracts has been traded thus far today, a contract volume which is representative of approximately 3.7 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 66% of AAL's average daily trading volume over the past month, of 5.7 million shares.
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Particularly high volume was seen for the $34 strike call option expiring July 12, 2019, with 3,264 contracts trading so far today, representing approximately 326,400 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: Lam Research Corp (Symbol: LRCX) saw options trading volume of 9,596 contracts, representing approximately 959,600 underlying shares or approximately 52.1% of LRCX's average daily trading volume over the past month, of 1.8 million shares. Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 37,383 contracts has been traded thus far today, a contract volume which is representative of approximately 3.7 million underlying shares (given that every 1 contract represents 100 underlying shares).
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Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 37,383 contracts has been traded thus far today, a contract volume which is representative of approximately 3.7 million underlying shares (given that every 1 contract represents 100 underlying shares). Below is a chart showing AAL's trailing twelve month trading history, with the $34 strike highlighted in orange: Lam Research Corp (Symbol: LRCX) saw options trading volume of 9,596 contracts, representing approximately 959,600 underlying shares or approximately 52.1% of LRCX's average daily trading volume over the past month, of 1.8 million shares. That number works out to 66% of AAL's average daily trading volume over the past month, of 5.7 million shares.
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Particularly high volume was seen for the $34 strike call option expiring July 12, 2019, with 3,264 contracts trading so far today, representing approximately 326,400 underlying shares of AAL. Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in American Airlines Group Inc (Symbol: AAL), where a total volume of 37,383 contracts has been traded thus far today, a contract volume which is representative of approximately 3.7 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 66% of AAL's average daily trading volume over the past month, of 5.7 million shares.
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6390.0
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2019-07-08 00:00:00 UTC
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1 Great Stock to Buy for July
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AAL
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https://www.nasdaq.com/articles/1-great-stock-to-buy-for-july-2019-07-09
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nan
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nan
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Shares of Delta Air Lines (NYSE: DAL) moved higher last week after the airline reported that revenue per available seat mile (RASM) reached the high end of its guidance range last quarter. That will allow it to beat analysts' estimates for Q2 earnings per share -- and it also suggests that Delta is entering the third quarter with plenty of momentum.
However, Delta isn't the only airline benefiting from favorable industry conditions right now. Spirit Airlines (NYSE: SAVE) is arguably in even better position than its larger rival. And with the shares trading at an extremely low valuation, Spirit Airlines stock looks like a great buy for investors in July.
In position to capitalize on the 737 MAX grounding
The biggest development in the U.S. airline industry in recent months has been the grounding of the Boeing (NYSE: BA) 737 MAX. Several U.S. airlines -- most notably, Southwest Airlines (NYSE: LUV) and American Airlines (NASDAQ: AAL) -- have been forced to cancel lots of flights due to having dozens of planes out of service. Delta Air Lines' strong investor update confirmed that this is creating substantial revenue opportunities for other airlines.
Spirit Airlines has much greater route network overlap with Southwest and American than Delta does. Spirit has major bases in Atlanta, Baltimore, Chicago, Dallas, Las Vegas, Los Angeles, and Orlando, all of which are among Southwest Airlines' 10 busiest focus cities. American Airlines also has big hubs in Chicago and Dallas -- and to a lesser extent, Los Angeles.
Spirit Airlines has lots of route overlap with two big 737 MAX operators. Image source: Spirit Airlines.
Furthermore, Spirit Airlines is one of American Airlines' biggest competitors in South Florida. American Airlines has a hub in Miami -- incidentally, its main base for the Boeing 737 MAX -- while Fort Lauderdale is Spirit's largest focus city.
With Southwest and American both forced to cancel more than 100 flights a day, it's no surprise that other airlines are seeing higher load factors and have been able to charge higher fares. Back in April, Spirit Airlines projected that RASM would rise 5% in the second quarter. But Spirit has beaten its guidance by a wide margin at times in recent years. Given that most of its peers have raised their unit revenue forecasts over the past month, there's a good chance that the second quarter was one of those times.
Other factors are improving
Strong unit revenue gains at Spirit Airlines would drive massive profit growth, due to the carrier's relatively favorable cost outlook. Oil prices have moderated since May, so Spirit's fuel costs per gallon will probably decline in the second quarter and could be down significantly year over year in the third quarter. That will help offset nonfuel unit cost increases.
Spirit Airlines also has a long track record of strong nonfuel cost performance. Despite facing substantial headwinds this year, the carrier is on track to limit its nonfuel unit cost growth to just 2% to 3%.
This isn't just a one-quarter tailwind
A new issue with the 737 MAX's handling discovered recently means that Boeing won't be able to get the plane back into service until late October at best. A November or December return is probably more realistic, and it wouldn't be shocking if the 737 MAX's return to commercial service slips into early 2020.
As a result, Spirit Airlines will continue to benefit from capacity constraints impacting American Airlines and (especially) Southwest Airlines in the second half of 2019. That should enable continued solid RASM growth, even as Spirit faces tougher year-over-year comparisons.
Southwest's 737 MAX fleet will be grounded for many more months. Image source: Southwest Airlines.
Additionally, any market share gains that Spirit makes this year could be more than temporary. For one thing, Spirit Airlines is still growing rapidly, boosting capacity at a double-digit rate annually. Moreover, the airline has dramatically improved the quality of its service over the past year or two. Customers who try flying Spirit this summer because American and Southwest are too expensive or don't have seats available may find that the budget carrier is worth considering for future trips as well.
The price is right
Spirit Airlines stock currently trades for just nine times the average analyst EPS estimate for 2019. That's an absurdly low valuation for a company that is growing quickly and consistently earns high profit margins.
While Spirit will have to contend with a rebound in capacity from Boeing 737 MAX operators next year, making RASM growth harder, the carrier has plenty of potential earnings growth drivers. A new loyalty plan and greater connecting route opportunities could boost unit revenue. Meanwhile, several factors that are driving up unit costs in 2019 won't repeat in 2020. Spirit will also continue to expand its fleet of ultra-fuel-efficient Airbus A320neos over the next year.
Thus, analysts expect Spirit Airlines to grow EPS by 11% next year, on top of an estimated 28% surge in 2019. Given this level of earnings growth, shares of the budget carrier could easily double in the next year or two. That makes Spirit Airlines a great stock for growth-seeking investors to consider buying in July.
10 stocks we like better than Spirit Airlines
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Spirit Airlines wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines, Southwest Airlines, and Spirit Airlines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines, Southwest Airlines, and Spirit Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Several U.S. airlines -- most notably, Southwest Airlines (NYSE: LUV) and American Airlines (NASDAQ: AAL) -- have been forced to cancel lots of flights due to having dozens of planes out of service. Shares of Delta Air Lines (NYSE: DAL) moved higher last week after the airline reported that revenue per available seat mile (RASM) reached the high end of its guidance range last quarter. Spirit has major bases in Atlanta, Baltimore, Chicago, Dallas, Las Vegas, Los Angeles, and Orlando, all of which are among Southwest Airlines' 10 busiest focus cities.
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Several U.S. airlines -- most notably, Southwest Airlines (NYSE: LUV) and American Airlines (NASDAQ: AAL) -- have been forced to cancel lots of flights due to having dozens of planes out of service. Other factors are improving Strong unit revenue gains at Spirit Airlines would drive massive profit growth, due to the carrier's relatively favorable cost outlook. While Spirit will have to contend with a rebound in capacity from Boeing 737 MAX operators next year, making RASM growth harder, the carrier has plenty of potential earnings growth drivers.
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Several U.S. airlines -- most notably, Southwest Airlines (NYSE: LUV) and American Airlines (NASDAQ: AAL) -- have been forced to cancel lots of flights due to having dozens of planes out of service. As a result, Spirit Airlines will continue to benefit from capacity constraints impacting American Airlines and (especially) Southwest Airlines in the second half of 2019. See the 10 stocks *Stock Advisor returns as of June 1, 2019 Adam Levine-Weinberg owns shares of Delta Air Lines, Southwest Airlines, and Spirit Airlines and is long January 2020 $20 calls on American Airlines Group.
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Several U.S. airlines -- most notably, Southwest Airlines (NYSE: LUV) and American Airlines (NASDAQ: AAL) -- have been forced to cancel lots of flights due to having dozens of planes out of service. In position to capitalize on the 737 MAX grounding The biggest development in the U.S. airline industry in recent months has been the grounding of the Boeing (NYSE: BA) 737 MAX. Other factors are improving Strong unit revenue gains at Spirit Airlines would drive massive profit growth, due to the carrier's relatively favorable cost outlook.
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6391.0
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2019-07-03 00:00:00 UTC
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Why Shares of American Airlines Group Gained Altitude in June
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AAL
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https://www.nasdaq.com/articles/why-shares-of-american-airlines-group-gained-altitude-in-june-2019-07-03
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nan
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nan
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What happened
Shares of American Airlines Group (NASDAQ: AAL) climbed 19.8% in June, according to data provided by S&P Global Market Intelligence, as airline investors responded positively to an easing of trade war rhetoric and a domestic pricing increase that indicates the airlines aren't running into issues filling their seats.
So what
The airlines were hit hard in May on rising trade tensions and fears of a global economic slowdown, with shares of American reaching a 52-week low late in the month. But the shares began to recover along with improving economic sentiment and talk of a truce between the U.S. and China.
Shares of American got a boost in the middle of June after the airline successfully led a round of domestic fare increases, helping to ease concern about demand. While airlines are forbidden from colluding on pricing, they do monitor one another's fare structures closely and try to match rates. For this reason, an attempt by one airline to raise fares often succeeds or fails based on whether competitors choose to match the price.
An American Airlines 737. Image source: American Airlines.
Even before the fare hike, American was feeling good about future results. On June 12 during its annual meeting, the company backed its previous forecast of between $4 and $6 in full-year earnings per share, in line with the $5.01 consensus analyst expectation.
American also said it is expanding initiatives that are expected to drive $3.2 billion in revenue improvements by 2021, as well as $1 billion in annual cost savings during the same period.
Still, there is potential for turbulence on the horizon. It was a top performer in what was a strong month for all airlines despite ongoing tensions between the company and its mechanics. The company received a temporary restraining order June 14 to block an alleged work slowdown by mechanics, but in a federal court filing late in the month, American complained that the union had ignored the order.
If relations between the union and the airline continue to deteriorate, it could make it difficult to operate its full schedule during the lucrative summer travel season.
Now what
American has been the laggard among large airline stocks this year, even after the strong June gains. There's reason to hope the ongoing restructuring, coupled with its relative benign exposure to China compared with its top rivals, will allow it to close the gap in the quarters to come.
Airline data by YCharts
There are still internal issues, most notably the squabbles with its mechanics. And as a customer of Boeing's troubled 737 MAX, American could be forced to increase cancellations or drop routes in the months to come if the plane is not soon certified. Investors should keep their safety belts fastened even at this higher altitude.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of American Airlines Group (NASDAQ: AAL) climbed 19.8% in June, according to data provided by S&P Global Market Intelligence, as airline investors responded positively to an easing of trade war rhetoric and a domestic pricing increase that indicates the airlines aren't running into issues filling their seats. So what The airlines were hit hard in May on rising trade tensions and fears of a global economic slowdown, with shares of American reaching a 52-week low late in the month. Shares of American got a boost in the middle of June after the airline successfully led a round of domestic fare increases, helping to ease concern about demand.
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What happened Shares of American Airlines Group (NASDAQ: AAL) climbed 19.8% in June, according to data provided by S&P Global Market Intelligence, as airline investors responded positively to an easing of trade war rhetoric and a domestic pricing increase that indicates the airlines aren't running into issues filling their seats. So what The airlines were hit hard in May on rising trade tensions and fears of a global economic slowdown, with shares of American reaching a 52-week low late in the month. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them!
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What happened Shares of American Airlines Group (NASDAQ: AAL) climbed 19.8% in June, according to data provided by S&P Global Market Intelligence, as airline investors responded positively to an easing of trade war rhetoric and a domestic pricing increase that indicates the airlines aren't running into issues filling their seats. 10 stocks we like better than American Airlines Group When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. * David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them!
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What happened Shares of American Airlines Group (NASDAQ: AAL) climbed 19.8% in June, according to data provided by S&P Global Market Intelligence, as airline investors responded positively to an easing of trade war rhetoric and a domestic pricing increase that indicates the airlines aren't running into issues filling their seats. An American Airlines 737. It was a top performer in what was a strong month for all airlines despite ongoing tensions between the company and its mechanics.
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6392.0
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2019-07-02 00:00:00 UTC
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3 Big Stock Charts for Tuesday: Mosaic, Centene and American Airlines
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AAL
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https://www.nasdaq.com/articles/3-big-stock-charts-for-tuesday%3A-mosaic-centene-and-american-airlines-2019-07-02
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nan
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nan
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Stocks logged an early win to the trading week, buoyed higher by promise for an amicable end to the trade war. All told, the S&P 500 ended Monday with a gain of 0.77%, peeling back some from a slightly stronger open, though leaving behind a dangerous gap in the process.
Source:
The Trump/Xi handshake lifted tech stocks in particular, though none as impressively as Nvidia (NASDAQ:). Shares of the GPU maker jumped 1.2%, on high volume, as it arguably had the most to gain from eased trade tensions between China and the U.S. Advanced Micro Devices (NASDAQ:) and Micron Technology (NASDAQ:) technically logged the bigger gains though, both being investor favorites right now.
Holding the market back was Boeing (NYSE:), down more than 2% after JP Morgan cut its full-year earnings estimates for the beleaguered plane maker.
None are terribly compelling trading prospects headed into Tuesday’s action though. Rather, take a look at stock charts of American Airlines Group (NASDAQ:), Centene (NYSE:) and Mosaic (NYSE:). All three names are putting some finishing touches on big moves.
Mosaic (MOS)
The past few weeks have been decidedly bullish ones for Mosaic, unwinding at least part of the pullback it has suffered since February. Yet, it would be all too easy to chalk up the move to a dead-cat bounce, and not expect it to last much longer.
There is something remarkably different about this advance that we’ve not seen with other, failed rebound efforts from MOS though. This one has more staying power than most traders may be giving it credit for.
Underscoring and bolstering the bullish argument is the bullish MACD crossover on the weekly chart.
Centene (CNC)
In late May, Centene shares were . Although a very thick layer of resistance still needed to be cleared, one already had been, and the advance at the time was taking shape on impressive volume.
That breakout was never allowed to fully take shape though. Rather, when the bulls weren’t able to continue making their inspirational progress, the bears stepped back up to the plate. Since then, they’ve solidified the message that they’re the ones still in charge.
In the meantime, the 100-day moving average line served as resistance again, when it intercepted the resistance line plotted in yellow on both stock charts that connect all the major highs since November.
American Airlines Group (AAL)
Finally, back in early May, American Airlines Group shares were . Although it was still logging lower highs at the same time a horizontal floor had taken shape, the buyers were increasing the frequency and strength of their tests of bullish waters.
AAL still isn’t above its most important technical resistance level. In fact, for a short while in late May and early June, American Airlines shares had broken under a major support level, hinting of a breakdown. That stumble may serve as a much-needed reset though, as AAL shares have broken back above one major ceiling and are back within reach of the biggest one of all.
Although the 200-day line hasn’t yet been breached, or even touched in several weeks, the falling resistance line marked yellow that connected the key highs between September and February has been broken.
While it may be somewhat evident on the daily chart, the weekly chart and its rising MACD lines better illustrate how even in the midst of what seems like net-bearishness, bullishness is brewing.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, , or follow him on Twitter, at @jbrumley.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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American Airlines Group (AAL) Finally, back in early May, American Airlines Group shares were . AAL still isn’t above its most important technical resistance level. That stumble may serve as a much-needed reset though, as AAL shares have broken back above one major ceiling and are back within reach of the biggest one of all.
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American Airlines Group (AAL) Finally, back in early May, American Airlines Group shares were . AAL still isn’t above its most important technical resistance level. That stumble may serve as a much-needed reset though, as AAL shares have broken back above one major ceiling and are back within reach of the biggest one of all.
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American Airlines Group (AAL) Finally, back in early May, American Airlines Group shares were . AAL still isn’t above its most important technical resistance level. That stumble may serve as a much-needed reset though, as AAL shares have broken back above one major ceiling and are back within reach of the biggest one of all.
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American Airlines Group (AAL) Finally, back in early May, American Airlines Group shares were . AAL still isn’t above its most important technical resistance level. That stumble may serve as a much-needed reset though, as AAL shares have broken back above one major ceiling and are back within reach of the biggest one of all.
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6393.0
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2019-06-30 00:00:00 UTC
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Southwest Airlines Cancels More Flights as Boeing 737 MAX Woes Continue
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AAL
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https://www.nasdaq.com/articles/southwest-airlines-cancels-more-flights-as-boeing-737-max-woes-continue-2019-06-30
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nan
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nan
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The Boeing (NYSE: BA) 737 MAX was grounded this March following two fatal crashes. At the time, it appeared that Boeing would be able to fix the safety issues created by its faulty Maneuvering Characteristics Augmentation System (MCAS) software relatively quickly, clearing the way for its best-selling jet to return to the skies for the busy summer travel season.
However, the timeline for recertifying the Boeing 737 MAX has been slipping over the past few months. As recently as one month ago, a return to service in August seemed likely. That's out of the question now, as FAA test pilots recently discovered new potential vulnerabilities.
As a result, U.S. airlines are once again delaying the return of the 737 MAX to their fleets and canceling flights. On Thursday, Southwest Airlines (NYSE: LUV) extended its 737 MAX cancellations by another month -- and further cancellations are virtually inevitable.
Southwest Airlines has removed the 737 MAX from its September schedule. Image source: Southwest Airlines.
Boeing acknowledges a new issue
Boeing finished developing updated MCAS software more than a month ago. It began flight testing in April, and by mid-May, the company had logged more than 360 hours in the air across 207 test flights using the new software. This made it seem realistic for Boeing to complete certification flights with FAA personnel on board in June and get 737 MAX jets flying again beginning in August.
However, during simulator testing this month, FAA pilots encountered a data processing issue that made it difficult to execute the standard recovery procedures in case of the MCAS software erroneously pushing the 737 MAX's nose down. The FAA has instructed Boeing to address this issue prior to scheduling certification flights.
In a statement released on Wednesday, Boeing said that it agreed with the FAA's assessment. The good news is that Boeing thinks it can resolve this latest issue with another software update rather than any hardware changes.
Nevertheless, Boeing doesn't expect to have a fix ready for certification until at least September, according to Reuters. After that, it will take weeks for the FAA to make a final decision. It would then take at least a month for most airlines to get their 737 MAX fleets back in the air, due to the need for software updates, maintenance work, and additional pilot training.
Southwest cancels more 737 MAX flights
As of earlier this week, American Airlines (NASDAQ: AAL) and Southwest Airlines expected to put their 737 MAX fleets back into service in early September. On Wednesday, United Airlines (NASDAQ: UAL) adopted the same timetable, canceling another 1,900 flights between early August and Labor Day weekend.
Image source: American Airlines.
Yet the most recent setback for the 737 MAX means that Boeing's troubled jet won't be ready to fly until October in a best-case scenario -- and possibly even November or December. This has made another round of flight cancellations inevitable.
Even before the latest delay surfaced, Southwest Airlines had decided to postpone the return of the 737 MAX by a month, from Sept. 2 to Oct. 1. That means it will scrap about 150 daily flights in September: nearly 4% of its total schedule.
Ultimately, a similar number of flight cancellations will be necessary until the Boeing 737 MAX is finally ready. American Airlines also could be forced to cancel more than 100 flights a day for much of the fall if it forges ahead with a plan to retire all of its MD-80s in early September. (The impact will be smaller at United, which has fewer 737 MAX aircraft.)
Expect a strong pricing environment
The 737 MAX grounding has upended capacity plans at Southwest, American, and United -- but particularly at Southwest. Whereas the low-fare airline giant had initially planned to grow its capacity by as much as 5% this year, its capacity is on track to decline 3.5% year over year in the second quarter. With a substantial proportion of its fleet out of service, Southwest Airlines will continue to shrink (albeit temporarily) in the coming months.
This unplanned capacity crunch means that airlines aren't growing as quickly as air travel demand is rising. As a result, airlines' pricing power in the domestic market will continue to improve this summer and into the fall. In short, travelers should expect higher airfares.
For Boeing 737 MAX operators, the unit revenue benefits of flying fewer planes will be more than offset by higher unit costs related to the grounding. By contrast, airlines that don't rely on the 737 MAX can look forward to unusually strong profits for the next quarter or two.
10 stocks we like better than Boeing
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Boeing wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Southwest Airlines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Southwest Airlines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Southwest cancels more 737 MAX flights As of earlier this week, American Airlines (NASDAQ: AAL) and Southwest Airlines expected to put their 737 MAX fleets back into service in early September. At the time, it appeared that Boeing would be able to fix the safety issues created by its faulty Maneuvering Characteristics Augmentation System (MCAS) software relatively quickly, clearing the way for its best-selling jet to return to the skies for the busy summer travel season. However, during simulator testing this month, FAA pilots encountered a data processing issue that made it difficult to execute the standard recovery procedures in case of the MCAS software erroneously pushing the 737 MAX's nose down.
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Southwest cancels more 737 MAX flights As of earlier this week, American Airlines (NASDAQ: AAL) and Southwest Airlines expected to put their 737 MAX fleets back into service in early September. Expect a strong pricing environment The 737 MAX grounding has upended capacity plans at Southwest, American, and United -- but particularly at Southwest. See the 10 stocks *Stock Advisor returns as of June 1, 2019 Adam Levine-Weinberg owns shares of Southwest Airlines and is long January 2020 $20 calls on American Airlines Group.
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Southwest cancels more 737 MAX flights As of earlier this week, American Airlines (NASDAQ: AAL) and Southwest Airlines expected to put their 737 MAX fleets back into service in early September. On Thursday, Southwest Airlines (NYSE: LUV) extended its 737 MAX cancellations by another month -- and further cancellations are virtually inevitable. See the 10 stocks *Stock Advisor returns as of June 1, 2019 Adam Levine-Weinberg owns shares of Southwest Airlines and is long January 2020 $20 calls on American Airlines Group.
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Southwest cancels more 737 MAX flights As of earlier this week, American Airlines (NASDAQ: AAL) and Southwest Airlines expected to put their 737 MAX fleets back into service in early September. As a result, U.S. airlines are once again delaying the return of the 737 MAX to their fleets and canceling flights. Expect a strong pricing environment The 737 MAX grounding has upended capacity plans at Southwest, American, and United -- but particularly at Southwest.
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6394.0
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2019-06-27 00:00:00 UTC
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American Airlines Prepares to Retire Its Aging MD-80 Fleet
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AAL
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https://www.nasdaq.com/articles/american-airlines-prepares-to-retire-its-aging-md-80-fleet-2019-06-27
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nan
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nan
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For the past several decades, McDonnell Douglas MD-80 jets have been a common sight at airports around the world (and especially in the U.S.). However, with production having ended in 1999, even the newest MD-80s are close to retirement age. Furthermore, new models like the Boeing (NYSE: BA) 737 MAX and Airbus A320neo are dramatically more fuel-efficient -- not to mention a lot quieter.
As a result, American Airlines (NASDAQ: AAL), by far the biggest MD-80 customer, has been planning to retire its final MD-80s in 2019. Earlier this week, the airline announced that it had scheduled its final MD-80 flights for Sept. 4. This will leave Delta Air Lines (NYSE: DAL) as the only U.S. passenger airline operating MD-80s.
The MD-80 was American Airlines' workhorse jet
American Airlines was the first major customer for the MD-80. After getting its first handful of MD-80s in 1983 on a bargain deal from a desperate McDonnell Douglas, American used the jet to power its rapid growth during the 1980s and early 1990s.
In total, American Airlines ordered 260 MD-80s. Its 2001 merger partner, TWA, was also a major MD-80 operator. As a result, by the end of 2001, American had 362 MD-80s, accounting for 41% of its total mainline fleet. That also represented more than 30% of the 1,191 MD-80s built over the lifetime of the program. No. 2 customer Delta Air Lines ordered a comparatively modest 120 MD-80-series jets.
These MD-80s served the bulk of American Airlines' domestic mainline routes. As recently as 2011, American was still operating more than 200 MD-80s. However, in recent years, the carrier has undertaken a massive fleet renewal project, replacing older aircraft with brand-new jets from Boeing and Airbus.
American Airlines has added hundreds of new planes to its fleet since 2013. Image source: American Airlines.
By the beginning of 2019, American Airlines was down to just 30 MD-80s and planned to get rid of the rest by year-end. On Monday, the airline revealed that it will retire the final 26 MD-80s on Sept. 4, just after the end of the summer peak travel season. The final flight -- sentimentally numbered AA 80 -- will depart the airline's Dallas-Fort Worth hub at 9 a.m. on that date and arrive in Chicago at 11:35.
There's probably a big caveat
There's still a chance that American Airlines will need to revise its timeline for retiring its last MD-80s. It's no coincidence that the scheduled retirement date of Sept. 4 is the same day that the carrier plans to put its Boeing 737 MAX fleet back into service. American's mainline fleet is set to shrink from 956 jets at the beginning of 2019 to 942 -- including 40 Boeing 737 MAX 8s -- by the end of the year, mainly due to the MD-80 retirements. There's no way that the airline can fly its full schedule this fall with no MD-80s if the 737 MAX fleet remains grounded.
While American Airlines executives had previously expressed confidence that the 737 MAX would resume service by August, CEO Doug Parker recently acknowledged that the plane's return could be delayed to October. If anything, that risk continues to rise, as the FAA revealed this week that it has identified a new issue with the 737 MAX that Boeing will need to address prior to scheduling certification test flights.
American Airlines could choose to make deep cuts to its schedule if the 737 MAX isn't ready by Sept. 4. However, it would probably be more economical -- and cause customers less disruption -- to keep the MD-80s flying for a little while longer in that scenario.
Delta's MD-80s are headed out the door, too
While the 737 MAX grounding is dragging on longer than expected, it's still quite likely that the type will be certified to resume service sometime in 2019. That will allow American Airlines to retire its final MD-80s before year-end. The MD-80s will be the first of several aircraft types to depart its fleet over the next several years as part of an ambitious fleet simplification effort.
This will leave Delta Air Lines as the only significant MD-80 operator in the U.S. As of the end of 2018, Delta had 84 MD-80s in its fleet, averaging 28 years of age. Not surprisingly, it plans to retire all of these jets by the end of next year.
Indeed, Delta Air Lines also decided recently to accelerate the retirement of its MD-90 fleet due to soaring maintenance costs. The MD-90 was an upgraded derivative of the MD-80 that never caught on with airlines. Delta still has several dozen in its fleet, but they are likely to be replaced within the next two years.
Thus, by the end of 2021, the storied McDonnell Douglas brand will have disappeared from the U.S. air travel market. There may be a bit of nostalgia from aviation enthusiasts, but upgrading to modern jets will be critical to future profit growth at American Airlines and Delta Air Lines.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
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*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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As a result, American Airlines (NASDAQ: AAL), by far the biggest MD-80 customer, has been planning to retire its final MD-80s in 2019. While American Airlines executives had previously expressed confidence that the 737 MAX would resume service by August, CEO Doug Parker recently acknowledged that the plane's return could be delayed to October. If anything, that risk continues to rise, as the FAA revealed this week that it has identified a new issue with the 737 MAX that Boeing will need to address prior to scheduling certification test flights.
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As a result, American Airlines (NASDAQ: AAL), by far the biggest MD-80 customer, has been planning to retire its final MD-80s in 2019. This will leave Delta Air Lines (NYSE: DAL) as the only U.S. passenger airline operating MD-80s. There may be a bit of nostalgia from aviation enthusiasts, but upgrading to modern jets will be critical to future profit growth at American Airlines and Delta Air Lines.
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As a result, American Airlines (NASDAQ: AAL), by far the biggest MD-80 customer, has been planning to retire its final MD-80s in 2019. The MD-80 was American Airlines' workhorse jet American Airlines was the first major customer for the MD-80. American's mainline fleet is set to shrink from 956 jets at the beginning of 2019 to 942 -- including 40 Boeing 737 MAX 8s -- by the end of the year, mainly due to the MD-80 retirements.
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As a result, American Airlines (NASDAQ: AAL), by far the biggest MD-80 customer, has been planning to retire its final MD-80s in 2019. American's mainline fleet is set to shrink from 956 jets at the beginning of 2019 to 942 -- including 40 Boeing 737 MAX 8s -- by the end of the year, mainly due to the MD-80 retirements. That will allow American Airlines to retire its final MD-80s before year-end.
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6395.0
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2019-06-24 00:00:00 UTC
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American Airlines Is Betting on the Airbus A321XLR
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AAL
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https://www.nasdaq.com/articles/american-airlines-is-betting-on-the-airbus-a321xlr-2019-06-25
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nan
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nan
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As expected, Airbus (NASDAQOTH: EADSY) launched the longest-range variant of its popular A321neo jet -- the A321XLR -- at last week's Paris Air Show. With a stated range of 4,700 nautical miles, the A321XLR will have by far the most range in its size class, allowing airlines to open up new long-haul routes that don't have enough demand to support wide-body service.
The A321XLR has already attracted substantial interest from airlines. During the air show, Airbus won 48 firm orders and 79 commitments for the new model, and customers converted another 99 firm orders from other models to the A321XLR.
No. 1 global airline American Airlines (NASDAQ: AAL) made the biggest commitment to the new jet model, agreeing to take 50. Let's take a look at why American Airlines is so bullish on the A321XLR.
More than just a 757 replacement
Like the other two big U.S. network carriers, American Airlines currently uses Boeing 757-200s for "long-and-thin" routes between the East Coast and Europe, as well as on certain routes to South America. However, the 757 has been out of production for 15 years. The 34 Boeing 757s that American still operates are nearly 20 years old on average.
American Airlines plans to replace 10 of its remaining 757s later this year, but there is no good substitute currently available for the other 24, which serve longer routes. The A321XLR is perfect, though, offering more range and 30% lower fuel burn per seat.
American Airlines will add 50 A321XLRs to its fleet between 2023 and 2025. Image source: Airbus.
As a result, American has decided to convert 30 of its existing Airbus A321neo orders to the A321XLR variant. The first eight will arrive in 2023 -- the first year of availability -- with the remaining 22 coming in 2024. That will be perfect timing for replacing American Airlines' last 24 757s.
However, American Airlines' management sees the Airbus A321XLR as more than just a replacement for the carrier's current 757s. The airline exercised 20 of its A321neo options to order additional A321XLRs that will arrive in 2025, bringing its A321XLR fleet to a total of 50 aircraft.
Enabling new routes
Given that American Airlines plans to take roughly twice as many A321XLRs as it would need to replace the 24 757s that will remain in its fleet after this year, the airline clearly expects this aircraft to open up new growth opportunities.
The A321XLR could be particularly useful in Philadelphia, American's main transatlantic hub. Philadelphia doesn't have the same level of local demand as New York, where Delta Air Lines and United Continental have their main transatlantic gateways. Thus, having a smaller long-haul aircraft could be vital for sustaining service to destinations that attract less traffic.
Image source: American Airlines.
American will also be able to fly from its Miami hub to pretty much anywhere in South America using the A321XLR. This could help the carrier expand its service to Brazil, where it has had to eliminate several routes in recent years due to a downturn in demand. Demand for travel to South America tends to be counterseasonal compared to the transatlantic market, so American may be able to serve smaller international destinations on a seasonal basis, flying A321XLRs to Europe during the spring and summer and to South America during the fall and winter.
The international expansion opportunities provided by the Airbus A321XLR will help American Airlines diversify away from the domestic market, to which it has greater exposure than its main rivals.
One small piece of the profitability-improvement puzzle
As a small, fuel-efficient aircraft capable of flying long-haul routes, the A321XLR will improve American Airlines' ability to match capacity to demand in its international network. And by enabling the carrier to add more international routes to its arsenal, the new aircraft will put American Airlines in a better position to win valuable corporate travel contracts.
American's A321XLRs will also enable the airline to simplify its fleet, as the plane will be very similar to the A321s and A321neos that American Airlines already operates. Meanwhile, the older 757 family will be fully retired by 2025 at the latest, reducing the company's costs.
The Airbus A321XLR certainly isn't a complete solution to American Airlines' recent struggles with weak profitability. Nevertheless, it could become an important part of the airline's turnaround plan.
10 stocks we like better than American Airlines Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and American Airlines Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of June 1, 2019
Adam Levine-Weinberg owns shares of Delta Air Lines and is long January 2020 $20 calls on American Airlines Group. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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1 global airline American Airlines (NASDAQ: AAL) made the biggest commitment to the new jet model, agreeing to take 50. Philadelphia doesn't have the same level of local demand as New York, where Delta Air Lines and United Continental have their main transatlantic gateways. The international expansion opportunities provided by the Airbus A321XLR will help American Airlines diversify away from the domestic market, to which it has greater exposure than its main rivals.
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1 global airline American Airlines (NASDAQ: AAL) made the biggest commitment to the new jet model, agreeing to take 50. During the air show, Airbus won 48 firm orders and 79 commitments for the new model, and customers converted another 99 firm orders from other models to the A321XLR. The A321XLR could be particularly useful in Philadelphia, American's main transatlantic hub.
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1 global airline American Airlines (NASDAQ: AAL) made the biggest commitment to the new jet model, agreeing to take 50. Enabling new routes Given that American Airlines plans to take roughly twice as many A321XLRs as it would need to replace the 24 757s that will remain in its fleet after this year, the airline clearly expects this aircraft to open up new growth opportunities. American's A321XLRs will also enable the airline to simplify its fleet, as the plane will be very similar to the A321s and A321neos that American Airlines already operates.
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1 global airline American Airlines (NASDAQ: AAL) made the biggest commitment to the new jet model, agreeing to take 50. During the air show, Airbus won 48 firm orders and 79 commitments for the new model, and customers converted another 99 firm orders from other models to the A321XLR. More than just a 757 replacement Like the other two big U.S. network carriers, American Airlines currently uses Boeing 757-200s for "long-and-thin" routes between the East Coast and Europe, as well as on certain routes to South America.
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6396.0
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2019-06-20 00:00:00 UTC
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Noteworthy Thursday Option Activity: I, AAL, TRUP
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AAL
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https://www.nasdaq.com/articles/noteworthy-thursday-option-activity%3A-i-aal-trup-2019-06-20
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nan
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nan
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Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in Intelsat SA (Symbol: I), where a total volume of 9,084 contracts has been traded thus far today, a contract volume which is representative of approximately 908,400 underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 49.5% of I's average daily trading volume over the past month, of 1.8 million shares. Particularly high volume was seen for the $15 strike put option expiring July 19, 2019, with 2,000 contracts trading so far today, representing approximately 200,000 underlying shares of I. Below is a chart showing I's trailing twelve month trading history, with the $15 strike highlighted in orange:
American Airlines Group Inc (Symbol: AAL) options are showing a volume of 31,902 contracts thus far today. That number of contracts represents approximately 3.2 million underlying shares, working out to a sizeable 49.4% of AAL's average daily trading volume over the past month, of 6.5 million shares. Particularly high volume was seen for the $32.50 strike call option expiring June 21, 2019, with 2,400 contracts trading so far today, representing approximately 240,000 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $32.50 strike highlighted in orange:
And Trupanion Inc (Symbol: TRUP) saw options trading volume of 1,001 contracts, representing approximately 100,100 underlying shares or approximately 48.6% of TRUP's average daily trading volume over the past month, of 205,800 shares. Particularly high volume was seen for the $35 strike put option expiring June 21, 2019, with 301 contracts trading so far today, representing approximately 30,100 underlying shares of TRUP. Below is a chart showing TRUP's trailing twelve month trading history, with the $35 strike highlighted in orange:
For the various different available expirations for I options, AAL options, or TRUP options, visit StockOptionsChannel.com.
Today's Most Active Call & Put Options of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Particularly high volume was seen for the $32.50 strike call option expiring June 21, 2019, with 2,400 contracts trading so far today, representing approximately 240,000 underlying shares of AAL. Below is a chart showing I's trailing twelve month trading history, with the $15 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 31,902 contracts thus far today. That number of contracts represents approximately 3.2 million underlying shares, working out to a sizeable 49.4% of AAL's average daily trading volume over the past month, of 6.5 million shares.
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Particularly high volume was seen for the $32.50 strike call option expiring June 21, 2019, with 2,400 contracts trading so far today, representing approximately 240,000 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $32.50 strike highlighted in orange: And Trupanion Inc (Symbol: TRUP) saw options trading volume of 1,001 contracts, representing approximately 100,100 underlying shares or approximately 48.6% of TRUP's average daily trading volume over the past month, of 205,800 shares. Below is a chart showing I's trailing twelve month trading history, with the $15 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 31,902 contracts thus far today.
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Below is a chart showing AAL's trailing twelve month trading history, with the $32.50 strike highlighted in orange: And Trupanion Inc (Symbol: TRUP) saw options trading volume of 1,001 contracts, representing approximately 100,100 underlying shares or approximately 48.6% of TRUP's average daily trading volume over the past month, of 205,800 shares. Below is a chart showing I's trailing twelve month trading history, with the $15 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 31,902 contracts thus far today. That number of contracts represents approximately 3.2 million underlying shares, working out to a sizeable 49.4% of AAL's average daily trading volume over the past month, of 6.5 million shares.
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Particularly high volume was seen for the $32.50 strike call option expiring June 21, 2019, with 2,400 contracts trading so far today, representing approximately 240,000 underlying shares of AAL. Below is a chart showing AAL's trailing twelve month trading history, with the $32.50 strike highlighted in orange: And Trupanion Inc (Symbol: TRUP) saw options trading volume of 1,001 contracts, representing approximately 100,100 underlying shares or approximately 48.6% of TRUP's average daily trading volume over the past month, of 205,800 shares. Below is a chart showing I's trailing twelve month trading history, with the $15 strike highlighted in orange: American Airlines Group Inc (Symbol: AAL) options are showing a volume of 31,902 contracts thus far today.
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6397.0
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2019-06-13 00:00:00 UTC
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6 Top Stock Trades for Friday: AMD, SQ, DIS
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AAL
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https://www.nasdaq.com/articles/6-top-stock-trades-friday%3A-amd-sq-dis-2019-06-13
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nan
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On Thursday we had some geopolitical news that sent oil prices flying while U.S. stocks pushed higher. The bears still can’t grab control of the football, despite the bulls having run so far, so fast. Let’s look at a few top stock trades as we enter Friday.
Top Stock Trades for Friday #1: Advanced Micro Devices
Shares of Advanced Micro Devices (NASDAQ:) made new highs earlier this week, but have since retreated. The stock is under pressure following an analyst warning on valuation and after reports surfaced of new GPUs from Nvidia (NASDAQ:).
That’s got shares down below $32, as a potential pullback looms. InvestorPlace readers . If we could get a “return to the scene of the crime,” that would be a great potential buying opportunity.
$30 may buoy the name first, though. That’s where the April highs rest with the 20-day moving average trending higher toward that mark now. There are various levels between $27.50 and $30 that should support AMD stock and I consider this a buy-the-dips candidate until proven otherwise.
Top Stock Trades for Tomorrow #2: Square
Square (NYSE:) did a great job pushing over downtrend resistance (blue line), hurdling its 50-day moving average in the process.
So long as SQ stock maintains above $69 it looks good on the long side in the short term. That keeps the stock over the 61.8% one-year retracement and the 50-day moving average. Over the 200-day moving average — which Square is currently contending with — could spark a breakout.
Top Stock Trades for Tomorrow #3: Disney
Disney (NYSE:) continues to move really well. Notice how the House of Mouse was almost immune to the May selloff. Not that it didn’t come under pressure and dip below its 20-day moving average — it did — but that’s mostly as shares went from $107 to $142 in just a month’s time.
After consolidating those gains and reclaiming the 20-day, shares look ready to move again. They are knocking on the door of new highs and it looks like DIS wants it. A breakout over $142.50 could trigger another wave of buying, perhaps pushing it to $150.
Top Stock Trades for Tomorrow #4: American Airlines
American Airlines (NYSE:) is rebounding from a brutal breakdown in late May, with shares crashing through long-time $30 support.
However, it’s since reclaimed that level, as well as the 20-day and 50-day moving averages. Now it contends with downtrend resistance (blue line), while the 200-day rests about $1 above current levels. Both have been strong levels of resistance.
Should they continue acting as resistance, see if investors get another buying opportunity back at $30. Otherwise, a breakout opportunity may be in the cards.
Top Stock Trades for Tomorrow #5: Cloudera
What a disaster Cloudera (NYSE:) has been. Shares have been cut in half in less than a month and appear lost for direction. There are better setups out there, but traders seem to have their eye on this one.
Over $5.40 to $5.50 could send CLDR back to $5.90. Clearing this mark is what’s necessary to start filling the gap, while the descending 20-day moving average will likely act as resistance. Below $5 is a big concern with CLDR.
I’d rather play a different stock…
Top Stock Trades for Tomorrow #6: Zscaler
Perhaps something like Zscaler (NASDAQ:).
This name has been knocking on the $80 door all day Thursday and wants to bust through like nobody’s business. Can it? Maybe this one fails to push through or causes a false breakout, but I like it more than CLDR. Watch for a push through $80 on ZS.
This one we were watching it.
Bret Kenwell is the manager and author of and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVDA.
The post appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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On Thursday we had some geopolitical news that sent oil prices flying while U.S. stocks pushed higher. The stock is under pressure following an analyst warning on valuation and after reports surfaced of new GPUs from Nvidia (NASDAQ:). Clearing this mark is what’s necessary to start filling the gap, while the descending 20-day moving average will likely act as resistance.
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Top Stock Trades for Friday #1: Advanced Micro Devices Shares of Advanced Micro Devices (NASDAQ:) made new highs earlier this week, but have since retreated. Top Stock Trades for Tomorrow #2: Square Square (NYSE:) did a great job pushing over downtrend resistance (blue line), hurdling its 50-day moving average in the process. Top Stock Trades for Tomorrow #4: American Airlines American Airlines (NYSE:) is rebounding from a brutal breakdown in late May, with shares crashing through long-time $30 support.
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Top Stock Trades for Friday #1: Advanced Micro Devices Shares of Advanced Micro Devices (NASDAQ:) made new highs earlier this week, but have since retreated. Top Stock Trades for Tomorrow #2: Square Square (NYSE:) did a great job pushing over downtrend resistance (blue line), hurdling its 50-day moving average in the process. Top Stock Trades for Tomorrow #3: Disney Disney (NYSE:) continues to move really well.
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Over the 200-day moving average — which Square is currently contending with — could spark a breakout. Not that it didn’t come under pressure and dip below its 20-day moving average — it did — but that’s mostly as shares went from $107 to $142 in just a month’s time. However, it’s since reclaimed that level, as well as the 20-day and 50-day moving averages.
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6398.0
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2019-06-13 00:00:00 UTC
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Why Shares of American Airlines Are Gaining Altitude on Thursday
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AAL
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https://www.nasdaq.com/articles/why-shares-american-airlines-are-gaining-altitude-thursday-2019-06-13
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nan
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nan
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What happened
Shares of American Airlines Group (NASDAQ: AAL) are up more than 5% on Thursday following a report that the airline had successfully led a round of domestic fare increases in recent days, strengthening the case for investing in the sector despite lingering questions about demand.
So what
While airlines are forbidden from colluding on pricing, they do monitor each other's fare structure closely and try to match rates. For this reason, an attempt by one airline to raise fares often either succeeds or fails based on whether competitors choose to match the price.
Image source: American Airlines Group.
J.P. Morgan analyst Jamie Baker in a note said American Airlines had increased domestic fares by $5 one-way on Wednesday morning, and that increase seemingly was matched by a systemwide hike by Hawaiian Airlines (NASDAQ: HA) and a "substantive" boost by Southwest (NYSE: LUV). This would mark the second fare hike since the beginning of May, and Baker admitted he was surprised to see it stick so soon after the previous one.
Shares of American have been grounded in 2019, down more than 5% year to date prior to Thursday's move, on concerns about the health of the domestic economy and fears that trade wars could eat into international business travel demand. But Baker wrote that domestic fare resilience is not priced into the stocks, saying that stronger fares and potential stronger-than-expected performance in the ongoing second quarter could reverse investors' "recent apathy" toward airline stocks.
Now what
Shares of American Airlines even after the Thursday's bump are down 24% over the past year, underperforming rivals including United Continental Holdings (NASDAQ: UAL), Delta Air Lines (NYSE: DAL), and Southwest. But the shares are hardly cheap, trading at a multiple to earnings slightly above that of United and Delta.
Airline data by YCharts
American is in the process of a makeover, including new routes from its Dallas-Fort Worth megahub and a cost-cutting program expected to generate $1 billion in savings. It's also less exposed to international markets than United or Delta, and has already cut back its service to China.
Airlines tend to trade up and down based on the health of the economy, so there is ample macro-reason to be cautious about American Airlines' shares today. But if the fare increase does hold, so too can the stock's push-off from its lows.
10 stocks we like better than American Airlines Group
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines. The Motley Fool recommends Hawaiian Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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What happened Shares of American Airlines Group (NASDAQ: AAL) are up more than 5% on Thursday following a report that the airline had successfully led a round of domestic fare increases in recent days, strengthening the case for investing in the sector despite lingering questions about demand. Shares of American have been grounded in 2019, down more than 5% year to date prior to Thursday's move, on concerns about the health of the domestic economy and fears that trade wars could eat into international business travel demand. Now what Shares of American Airlines even after the Thursday's bump are down 24% over the past year, underperforming rivals including United Continental Holdings (NASDAQ: UAL), Delta Air Lines (NYSE: DAL), and Southwest.
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What happened Shares of American Airlines Group (NASDAQ: AAL) are up more than 5% on Thursday following a report that the airline had successfully led a round of domestic fare increases in recent days, strengthening the case for investing in the sector despite lingering questions about demand. Now what Shares of American Airlines even after the Thursday's bump are down 24% over the past year, underperforming rivals including United Continental Holdings (NASDAQ: UAL), Delta Air Lines (NYSE: DAL), and Southwest. The Motley Fool owns shares of and recommends Delta Air Lines and Southwest Airlines.
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What happened Shares of American Airlines Group (NASDAQ: AAL) are up more than 5% on Thursday following a report that the airline had successfully led a round of domestic fare increases in recent days, strengthening the case for investing in the sector despite lingering questions about demand. J.P. Morgan analyst Jamie Baker in a note said American Airlines had increased domestic fares by $5 one-way on Wednesday morning, and that increase seemingly was matched by a systemwide hike by Hawaiian Airlines (NASDAQ: HA) and a "substantive" boost by Southwest (NYSE: LUV). But Baker wrote that domestic fare resilience is not priced into the stocks, saying that stronger fares and potential stronger-than-expected performance in the ongoing second quarter could reverse investors' "recent apathy" toward airline stocks.
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What happened Shares of American Airlines Group (NASDAQ: AAL) are up more than 5% on Thursday following a report that the airline had successfully led a round of domestic fare increases in recent days, strengthening the case for investing in the sector despite lingering questions about demand. J.P. Morgan analyst Jamie Baker in a note said American Airlines had increased domestic fares by $5 one-way on Wednesday morning, and that increase seemingly was matched by a systemwide hike by Hawaiian Airlines (NASDAQ: HA) and a "substantive" boost by Southwest (NYSE: LUV). But the shares are hardly cheap, trading at a multiple to earnings slightly above that of United and Delta.
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6399.0
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2019-06-13 00:00:00 UTC
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August 2nd Options Now Available For American Airlines Group (AAL)
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AAL
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https://www.nasdaq.com/articles/august-2nd-options-now-available-american-airlines-group-aal-2019-06-13
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nan
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nan
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Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available today, for the August 2nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new August 2nd contracts and identified one put and one call contract of particular interest.
The put contract at the $32.00 strike price has a current bid of $1.27. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $32.00, but will also collect the premium, putting the cost basis of the shares at $30.73 (before broker commissions). To an investor already interested in purchasing shares of AAL, that could represent an attractive alternative to paying $32.88/share today.
Because the $32.00 strike represents an approximate 3% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 60%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 3.97% return on the cash commitment, or 28.97% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for American Airlines Group Inc, and highlighting in green where the $32.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $33.50 strike price has a current bid of $1.58. If an investor was to purchase shares of AAL stock at the current price level of $32.88/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $33.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.69% if the stock gets called away at the August 2nd expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if AAL shares really soar, which is why looking at the trailing twelve month trading history for American Airlines Group Inc, as well as studying the business fundamentals becomes important. Below is a chart showing AAL's trailing twelve month trading history, with the $33.50 strike highlighted in red:
Considering the fact that the $33.50 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 52%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 4.81% boost of extra return to the investor, or 35.08% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example, as well as the call contract example, are both approximately 43%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $32.88) to be 41%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Top YieldBoost Calls of the Nasdaq 100 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Of course, a lot of upside could potentially be left on the table if AAL shares really soar, which is why looking at the trailing twelve month trading history for American Airlines Group Inc, as well as studying the business fundamentals becomes important. Below is a chart showing AAL's trailing twelve month trading history, with the $33.50 strike highlighted in red: Considering the fact that the $33.50 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available today, for the August 2nd expiration.
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Below is a chart showing AAL's trailing twelve month trading history, with the $33.50 strike highlighted in red: Considering the fact that the $33.50 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available today, for the August 2nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new August 2nd contracts and identified one put and one call contract of particular interest.
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Below is a chart showing AAL's trailing twelve month trading history, with the $33.50 strike highlighted in red: Considering the fact that the $33.50 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available today, for the August 2nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new August 2nd contracts and identified one put and one call contract of particular interest.
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Below is a chart showing AAL's trailing twelve month trading history, with the $33.50 strike highlighted in red: Considering the fact that the $33.50 strike represents an approximate 2% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. Investors in American Airlines Group Inc (Symbol: AAL) saw new options become available today, for the August 2nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AAL options chain for the new August 2nd contracts and identified one put and one call contract of particular interest.
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