Transcript Document 7181005

Global Airlines
Presented By:
Parveen Rai
Dan Wurst
Amar Leekha
Aman Sandhu
Overview of Presentation
Industry Overview
Current State
Trends
Key Statistics
Regional Overviews
Europe, North America & Asia-Pacific
British Airways
Singapore Airlines
SouthWest
Conclusion
Characteristics of the Industry
Very cyclical, moves with strength of economy
Low Profit Margins….and falling
Economic growth
Asset intensive industry
Investments in aircraft, facilities & equipment
Labour constitutes largest cost
Jet fuel costs second largest expense
Strategic Alliances to defend against competition
Technology
E-tickets
Online Vendors
Future Outlook
Recovery of US economy
• Confidence in President Bush
Fuel Prices?
Government Funding
• National security
• Subsidies
High tax burden & Regulations
Cost structure
Increase buying power of customers
Customer demands
• Personal & Business customers
Employee Cost
Profitability
Macroeconomic Forces
Slow Economy
Airlines lost $2.5 billion in 2003 (IATA)
Total 2001-2003 losses: $23.2 billion
External Factors Leading to Losses:





September 11th
Costs of implementing new security measures at airports
Severe Acute Respiratory Syndrome (SARS)
Increased insurance premiums
Rising fuel prices in 2003
Trends
Growth in Traffic
RPM’s grew 2.3% in 2003
Average industry load factor reached record 73.4 %
Increase in cargo volume
Large Layoffs
Increased competition from low-cost carriers
Westjet, Southwest and other clone airlines
Increased borrowing to cover losses from
macroeconomic effects
Capacity Utilization
Regional Overview:
European
North American
Asia-Pacific
European Market Overview
European Market
Slower growth for major European carriers:
Increase of “no frill” carriers
Deregulation
Worldwide Economic downturn
Structural problems of overcapacity
Threats of terrorism*
***Carriers exposed to US market***
Trends: Euro Market
No-frills airlines growing rapidly
Traffic levels within Europe have remained strong
Account for 1/3 of UK domestic services and routes
between the UK and Europe
Increase in amount of planes & routes
Deregulations reduce barriers to entry
Likely to be followed by industry consolidation
Further Growth expected
Future focus on other Euro hubs
Alliances and Strategic Partnerships
North American Market
North American Market
Most mature market
1978 Deregulation: emergence of “no-frills”
market
Followed by consolidation of industry
“No-frills” make up 20% of US domestic
market
Southwest leading low-cost carrier
Sending major carriers into bankruptcy
North America (cont)
Major Domestic Airlines expanding
international presence
US signing of “open skies” agreement
Unrestricted capacity and frequency
Factors depressing air travel
September 11
2001 Recession
Fall of US Airways & United: currently
restructuring
Asia-Pacific Market
Asia-Pacific Market
Relatively immature airline market
Strong growth in airline travel
1997-98 Asian crisis temporarily halted growth
Restructuring
Disposal of non core assets
Termination of loss making routes
Wide ranging cost reduction programs
Asia-Pacific
Asian carriers look to form alliances with European
and N. American carriers
Affected by US economy downturn (2001-2002)
Less sever on air travel industry compared to US
Growth rate expected to be greater than that of
western airline markets
Rapid growth in large domestic markets (China)
Most regulated region for air travel
Competitive Advantage: closer to home
Key Measures of Performance
International Routes
(Passengers Carried)
International Routes (RPK)
Total Passengers Carried
(All Routes)
Total RPK
Nominal Yields
Yields
Real Yields
2001
1997
1993
1989
1985
1981
1977
1973
1969
1965
1961
1957
1953
1949
1945
1941
1937
Past Yields
Yields
30
25
20
15
10
5
0
Industry Growth Trends
Industry Growth Trends (cont)
Forecasted Revenue Passengers (in millions)
230.0
220.0
210.0
200.0
190.0
180.0
170.0
160.0
150.0
140.0
130.0
120.0
110.0
100.0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Industry Growth Trends (cont)
Forecasted RPK's (in millions $)
110,000.0
105,000.0
100,000.0
95,000.0
90,000.0
85,000.0
80,000.0
75,000.0
70,000.0
65,000.0
60,000.0
55,000.0
50,000.0
45,000.0
40,000.0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Projected Revenue Growth
What Does the
Future Look Like?
Profits/Losses
10,000,000
5,000,000
-5,000,000
-10,000,000
-15,000,000
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
20
03
**
*
0
Profitable Strategies
Recovery of airline industry helps other industries
Carriers must demonstrate:
• “Comfortable” Security
• Customer service
• Productivity
Government Involvement:
• Cooperation with airports and airlines
• Encourage travel
• Minimize hassles
• Airport fees
Alternatives for short Hauls
Profitable Strategies
Airport – Airline Relationship
• Work together with final customer in mind
Ticket Prices
• Low cost carriers
• Increased competition
• Price conscious business customers
Labour Productivity
Consolidation of Industry
• Mergers/Strategic Alliances
Growth Constraints:
Fuel Costs
Fuel Efficiency:
43.6
pm/gallon
Hedging
Fuel Costs: Past
Past Fuel Costs
1.2
1
0.8
0.6
$/Gallon
0.4
0.2
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
0
Fuel Costs: Future
Forecasted Fuel Costs
0.84
0.82
0.80
0.78
0.76
0.74
0.72
0.70
0.68
0.66
0.64
0.62
0.60
$/Gallon
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Growth Constraints: Taxes
Taxes:
1972: Taxes = 7% of
ticket price
2004: 26% of ticket
British Airways
British Airlines
Listed and Traded on the London Stock Exchange
Trading symbol: BAY
Also Trades as an ADR on the TSX and NYSE
• Symbol: BAB
• 1 ADR = 10 Shares
British Airlines
As of Market Close on November 2,
2004
• Bid: 218.75 Pents ($4.93 CDN)
• Ask:219 Pents ($4.94 CDN)
• Volume 28,551,043
• Outstanding Shares: 1,070,077,000
Background
One of the leading airlines in Europe
• Second biggest in Europe by passengers carried
Operating Bases
• Heathrow
• Gatwick
British Airways is a public limited company
Employed approximately 49,072 employees in
2004
It operates 291 aircraft
Flies to 550 destinations in 133 countries
A Quick History Lesson
Successors:
• Aircraft Transport and Travel Limited (Daimler Airways)
• Instone
• Handley Page
• British Air Marine Navigation
• Smaller Airlines (1935 merged into British Airways
Limited)
Merged In 1939
• British Overseas Airways Corporation
Trading of BA shares began in 1987
Alliance
Member of Oneworld
• American airlines
• Qantas
• Cathay Pacific
• Iberia
• Finair
• Aer Lingus
• LanChile
Franchises and Holdings
Franchises
•
•
•
•
•
GB airlines
British Mediterranean
British Airlines Citiexpress
Loganair
Sun Air
Holdings
• Air Mauritius
• Qantas
• Spanish Iberia
Stated Objectives
Future size and shape strategy
•
•
•
Achieve a 10% operating margin
Operating margin up 1.6 points from 3.8 points in 2003
13,000 reduction in employees since August, 2001
Fleet and network strategy
•
•
•
Aircraft replacements
Reduced fleet by 39 aircraft
Gatwick moving to point and spoke strategy
Low fares strategy
•
•
On 180 shorthaul routes
Compete with no frill competitors
External cost reductions
Hedging strategies
Employee cost saving strategies
Product and service improvements
Main Competitors
Europe Market
• Lufthansa
• Air France
North American Market
• United
Cost Structure
10%
8%
30%
13%
8%
9%
7%
13%
2%
Employee costs
Depreiction and ammoritization
Aircraft lease costs
Fuel and oil costs
Engineering and other aircraft costs
Landing fees and en route charges
Handling charges, catering and other operating costs
Selling costs
Accomodation, ground equipment costs and currency differences
Geographic Revenue Distribution
Geographic Distribution of Revenue
Europe
The Americas
Africa, Middle East ,and India
Far East and Australia
Strengths/Opportunities
Strong Brand Equity
Account for over half of flights within
UK
New low fares strategy to compete
against “no frills airlines”
37.3% increase in operating profit
Increasing air travel
Weaknesses and Threats
Heavy Competition
Strict Government Regulations
• Route flying rights
• Fare setting
• Airport access
• “Slots” availability
• New operational standards (security, safety)
Jet Fuel Prices
Terrorism
Demand for travel affected by economic conditions (SARS)
Increased Insurance Costs
Increased Security Costs
Management
Rod Eddinghton
• Chief Executive
• May 2000
John Rishton
• CFO
• September 1994 via controller
Mike Street
• Director of customer service and operations
• 1997
Robert Webb QC
• General Counsel
• 1998
Martin George
• Director Marketing and Communications
• 1987 via director of Marketing
Management Con’t
Roger Maynard
• Director of Investments
• 1987 via VP Commercial Affairs N.A
Alan McDonald
• Director Engineering
• 1966
Lloyd Cromwell Griffths
• Director of Flight Operations
• 1973 via Chief Pilot
Paul Coby
• Chief Info Officer
Robert Boyle
• Director of Commercial Planning
Neil Roberts
• Director for People
Operations
2004
2003
2002
2001
2000
Passenger
Load
Factor
.73
.719
.704
.714
.696
RPK
(Millions)
103,092
100,112
106,270
123,970
127,425
36,103,000
38,019,000
40,004,000
44,462,000
18,315,000
ASK
(Millions)
141,272
139,172
151,046
17,2524
183,158
Breakeven
Load
Factor
.636
.639
.65
.644
.659
RTK
(Millions)
14,771
14,231
14,362
16,987
17,215
Tons Cargo
Carried
796,000
764,000
755,000
914,000
909,000
Passengers
Carried
Liquidity Analysis
Q1-2004
2004
2003
2002
2001
2000
1999
Current
.922
0.922
.773
.799
.813
.777
.847
NWC
-242
-231
-818
-642
-562
-774
-465
Capital Structure Analysis
Debt/Equity
Interest
Coverage
Q1-2004
2004
2003
2002
2001
2000
1999
4.21
5.54
6.15
5.16
4.44
4.53
3.04
2.1
1.6
.3
1.7
1
Capital Market Analysis
Q1-2004
2004
2003
2002
2001
2000
1999
Price
Earnings
7.58
7.62
-10.7
-21.35
14.99
-7.85
3.96
Market
to Book
1.56
1.52
.62
1.16
1.34
1.42
1.44
Dividend
Yield
0
0
0
.057
.054
.042
Dividend
Payout
0
0
0
.852
-.427
.164
Profitability Analysis
Q1-2004
2004
2003
2002
2001
2000
1999
ROA
4.38%
3.05%
-.87%
-.88%
1.64%
-3.28%
.9%
ROE
20.53%
19.96%
-6.21%
-5.42%
8.92%
-18.11%
3.64%
5.23%
3.84%
-1.32%
4.1%
.94%
.370
-.103
-.114
.210
-.420
Profit
Margin
EPS
Cash Flow Analysis
Free Cash
Flow
2004
2003
2002
2001
2000
£676,000,000
£ 942,000,000
£ 213,000,000
£ 491,000,000
£ 316,000,000
Stock Valuation
Discount Rate
• Beta = 1.98459
• Market Return = 7.48% (FTSE 20 yr average
return)
• Risk Free = 2.47% (1 Year LIBOR)
• Discount Rate = 12.22%
• Average Cash Flow = £527,600,000
Stock Valuation
Free Cash
Flow
Discounted
2004 2005 2006 2007 2008 2009 2010
2011 2012
527.6
527.6
527.6
527.6
527.6
527.6
527.6
527.6
527.6
470.23
419.1
373.53
332.91
296.72
264.45
235.7
210.07
187.23
PV = £7,789,940,000
Market Capitalization = £3,032,128,400
Undervaluation = £4,757,811,600
Pricing Chart
Pricing Chart (5 Year)
Recommendations
Poor operating statistics
Liquidity Problems
Barely covering interest
Poor earnings
Therefore…Sell
Singapore Airlines
Listed and traded on the
Singapore Stock Exchange
Share price as of Nov 3
10.90 SD
Also traded in the US as an
ADR: Symbol SPAAF
Exchange Rate: 1.37414 SD
– 1 CAD (As of Nov 3rd)
Number of shares issued
1,218,149,660
Brief History
SIA began in May 1947, when Malaysian Airways first
operated a twin-engined Airspeed Consul between Singapore,
Kuala Lumpur, Ipoh and Penang.
1963 – Changed to Malaysian Airlines with formation of
federation of Malaysia
1966 – Became Malaysian-Singapore Airlines
1972 – Restructured itself into 2 airlines (Malaysian &
Singapore Airlines)
Stated Objectives
Continue to offer innovative promotions to attract
new customers and maintain competitive advantage
Create new non-stop routes which will connect the
East to West. These flights offer quick and efficient
non-stop service utilizing SIA’s new Airbus A340-500’s
• After implementing the longest flight in the world from
Singapore to Los Angeles and recently creating a new
non-stop route from Singapore to New York, SIA plans to
create new routes to decrease flight and stop-over time
Provide competitive fares through their low-cost
subsidiaries (Tiger, SilkAir and Virgin Airways)
Build new terminal in strategic locations to cater for
low-cost airlines (i.e. new terminal built in Changi
Airport)
Route Map
Star Alliance Members
Air Canada
Air New Zealand
ANA
Asian Airlines
Austrian
BMI
LOT Polish Airlines
Lufthansa
Singapore Airlines
Spanair
Thai Airways
United
US Airways
VARIG
SAS
Subsidiaries of SIA
Silk Air
SIA Engineering Co.
Tradewinds
SIA Cargo
SATS
Main Competitors
Cathay Pacific
Japan Airlines
Malaysian Airlines
Strengths
 Great Reputation for
quality service
 Low Debt Structure (low
interest costs)
 Addition of new Airbus
A340-500’s
 New non-stop routes
 Partners & Alliances
 Profit Sharing Plans
 Excellent in flight-service
(fleet)
Weaknesses
Terrorism
Jet Fuel Prices
SARS
War in IRAQ
Decrease in load factor
Decline in EPS
Cost Structure
10%
2%
4%
17%
7%
13%
9%
2%
6%
11%
19%
Staff Costs
Depreiction and ammoritization
Aircraft lease costs
Fuel and oil costs
Aircraft Maintenance and Overhaul Costs
Airport and Overflying Charges
Handling charges, catering and other operating costs
Selling costs
Rentals on Leased Aircraft
Communication and Information Tech Costs
Other Costs
Geographic Distribution Of Revenue
11%
29%
19%
21%
20%
East Asia
Europe
Americas
South and West Pacific
West Asia and Africa
Operating Data
04-03
Pax Carried
03-02
02-01
01-00
00-99
13278000
15326000
14765000
15002000
13872000
ASK
88252700000
99565900000
94588500000
92648000000
87728300000
RPK
64685200000
74183200000
69994500000
71118400000
65718400000
Pax Load
Factor
73.30%
74.50%
74.00%
76.80%
74.90%
Pax Break/
Even
Factor
72.80%
73.60%
71.10%
70.20%
66.2%
Liquidity Analysis
2004 2003
2002
2001
2000
Current 0.9177 0.6871 0.9243 0.8925 0.9432
Ratio
Net
-0.013 -0.0596 -0.0128 -0.0237 -0.0129
Working
Capital
Ratio
Capital Structure Analysis
2004
2002
2001
2000
0.3900 0.3952
0.3937
0.3619
0.3547
Coverage 13.333 15.159
21.811
50.792
39.352
D/E
Interest
Ratio
2003
Capital Market Analysis
2004
P/E
15.638
Market- 11.802
Book
Dividend 0.01376
Yield
Dividend 0.12904
Payout
2003
10.011
11.286
2002
27.746
10.951
2001
10.751
10.738
2000
17.505
9.537
0.01142 0.01597 0.02573 0.01250
0.17064 0.33528 0.20861 0.19716
Profitability Analysis Ratio
ROA
ROE
Profit
Margin
EPS
2004
2003
2002
2001
2000
4.336% 5.639% 3.462% 9.017% 6.923%
6.038%
7.863%
4.770%
.08700
0.10126 0.06740 0.15772 0.13077
0.697
0.874
0.519
12.25%
1.265
9.172%
0.914
Quarterly Financial Data
2004
Q1 April – June
Q2 July – Sept
ROE
0.017679754
0.024443137
ROA
0.012441246
0.01693934
P/E
52.830
37.201
D/E
.42105
.44297
EPS
0.212
0.293
P/BV
11.99111
11.98700
Cash Flow Analysis
Free Cash
Flow
(SGD)
2004
2003
1153.7 94.4
Million Million
2002
-472.7
Million
2001 2000
756.2 87.3
Million Million
Stock Valuation
Discount Rate
• Beta = 0.631
• Market Return = 5.36% Strait Times Index (10
Yr Average)
• Risk Free Rate = 1.4% (5 Year Bond)
• Discount Rate = 3.8988%
• Average Cash Flow = 441.08 Million SGD
Stock Valuation
2004
2005
2006
2007
2008
2009
2010
2011
2012
Free Cash
Flow
441.08
Million
441.08
Million
441.08
Million
441.08
Million
441.08
Million
441.08
Million
441.08
Million
441.08
Million
441.08
Million
Discounted
424.52
408.58
393.26
378.50
364.29
350.63
337.46
324.80
312.62
• Present Value: 3,294,660,000
• Market Capitalization: 13,281,736,011.48 SGD
• Overvalued: 9,987,076,011.48 SGD
Recommendation
Moderate Buy
Very Liquid Company (high current ratio and large
cash on hand)
Great track record for exceptional customer service
Constant dividend payout
Expanding routes and services
Diversified risk through low cost subsidiaries
Very low levels of debt (low interest payments)
Southwest Airlines
Share Price: USD$15.96
Southwest Airlines (LUV)
Listed on: NYSE
Symbol: LUV
Index Member:
S&P 500, DJTA
Market Cap: $12.44B
Shares Outstanding:
779.58M
Daily Departures:
2,800 flights a day
Company Background
Began service June 18, 1971
with flights to Houston, Dallas,
and San Antonio.
Shorthaul, high-frequency,
point-to-point, low-fare service
Most airlines use the hub-andspoke system
As of December 31, 2003,
Southwest served 337 nonstop
city pairs.
largest carrier based on
scheduled domestic departures.
2003 marked Southwest's 31st
consecutive year of profitability.
Growth and Expansion
Addition of 16 nonstop flights from Chicago Midway Airport
to 13 existing nonstop markets.
nonstop service to:
Orlando
Fort
Lauderdale/Hollywood
Manchester
Las Vegas
Raleigh-Durham
Tampa Bay
will begin in the first
quarter of 2005
Oakland
Phoenix
Seattle
Providence
Philadelphia, and
Columbus
Los Angeles
International
Cost Reducing Strategies
Restructuring
Consolidation of reservations operations
Elimination of traditional travel agency
commissions
Future fleet of Boeing 737-700 will have
fuel-saving Blended Winglets
Hedging 70-80% of fuel costs at
approx. $24/barrel of crude oil
Mission Statement
“…dedication to the highest quality of
Customer Service delivered with a
sense of warmth, friendliness, individual
pride, and Company Spirit.”
Statement of Objectives
to provide safe, low price transportation
maximum customer convenience
to be the cheapest and most efficient operator
In specific domestic regional markets
to provide customers with a high level of convenience
and service
Outstanding customer service through highly
motivated employees.
Main Competitors
AMR Corp. (AMR)
JetBlue Airways Corp. (JBLU)
Delta Airlines Inc. (DAL)
Strengths/Weaknesses
Strengths
Known for superior
customer service
Low-cost, no-frills
Direct one-way travel
Point-to-point efficiency
Largest carrier for
domestic service
One fleet type
Hedge against exposure
to fuel prices (80%)
Only airline rated
investment grade
Weaknesses
Point-to-point creates
excessive expenditure
Too many locations,
administrative costs
Risk to shocks in US
economy, since it is a
domestic carrier
Cost Structure
18%
41%
7%
7%
3%
1%
8%
15%
Salaries, wages & benefits
Maintenance materials & repairs
Fuel & oil
Agency commissions
Aircraft rentals
Landing fees & other rentals
Depreciation & amortization
Other operating expenses
Market Share & Capacity
System Map
Boeing 737 Fleet
737 Type
Seats
Average
Age
(Yrs)
# of
Aircraft
# Owned
#
Leased
-200
122
21.2
23
21
2
-300
137
12.6
194
110
84
-500
122
12.7
25
16
9
-700
137
3.3
146
145
1
9.6
388
292
96
Totals
• Plans to retire 23 737-200 by end of first quarter 2005.
Operating Data
($’s in millions)
2003
2002
2001
2000
1999
RPM (000s)
47,943,066
45,391,903
44,493,916
42,215,162
36,479,322
ASM (000s)
71,790,425
68,886,546
65,295,290
59,909,965
52,855,467
Passenger load
factor
66.78%
65.89%
68.14%
70.46%
69.02%
Passenger
revenue yield per
RPM
$0.1197
$0.1177
$0.1209
$0.1295
$0.1251
388
375
355
344
312
Size of fleet at
year end
Financial Data
($’s in millions)
2003
2002
2001
2000
1999
Operating
revenue
$5,937
$5,522
$5,555
$5,650
$4,736
Operating
expense
5,454
5,105
4,924
4,628
3,954
Operating income
483
417
631
1,022
782
Operating margin
8.14%
7.55%
11.36%
18.09%
16.51%
Net income
442
241
511
603
474
Net margin
7.44%
4.36%
9.20%
10.67%
10.02%
EPS (basic)
$0.56
$0.31
0.67
0.81
0.63
EPS (diluted)
$0.54
$0.30
0.63
0.76
0.59
Liquidity
2003
2002
2001
2000
1999
Current Ratio
1.34
1.56
1.13
0.64
0.66
NWC (million’s)
590
798
281
(466.5)
(329.4)
Capital Structure
2003
2002
2001
2000
1999
Interest
Coverage
5.31
3.93
9.01
14.59
1.45
D/E
0.96
1.02
1.24
0.93
0.99
Capital Market Analysis
2003
2002
2001
2000
1999
P/E
28.82
44.84
27.58
27.60
17.13
MV/BV
2.52
2.44
3.51
4.82
2.87
0.11%
0.13%
0.10%
0.07%
0.13%
Dividend Yield
Profitability
2003
2002
2001
2000
1999
ROA
4.69%
2.68%
6.53%
9.79%
9.15%
ROE
9.33%
5.71%
13.69%
19.19%
18.13%
Profit Margin
7.44%
4.36%
9.20%
10.67%
10.02%
EPS
$0.54
$0.30
$0.63
$0.76
$0.59
Cash Flow Analysis
(dollars in
millions)
2003
2002
2001
2000
1999
Cash Flow From
Operations
1,336
520
1,485
1,298
1,029
98
(83)
487
163
(139)
Free Cash
Flow
Cash Flow Analysis
increase in operating cash flows in 2003 a result of:
due to higher net income
$271 million government grant from the Wartime Act
increase in accrued liabilities
decrease in accounts and other receivables
Heavy investments result in FCF of $98Mill for 2003
Large cash increase due to exercise stock options
Use increase in cash flow to repurchase up to $300 million of
common stock in the open market
Stock Valuation
Discount Rate
• Beta = 0.852
• Market Return = 9.98% Average Return S&P 500
Index (22 Yr Average)
• Risk Free Rate = 4.85% (30 Year Bond)
• Discount Rate = 9.2105%
• Average Discounted Cash Flow=$96,318,685.20
Discounted Cash Flow
Present Value: $528,970,792
Market Capitalization: $12.44B
Net Market Value of Assets
737 Type
Seats
Average
Age (Yrs)
# of
Aircraft
-200
122
21.2
23
21
2
-300
137
12.6
194
110
84
-500
122
12.7
25
16
9
-700
137
3.3
146
145
1
9.6
388
292
96
Totals
#
#
Owned Leased
Competitor Comparison
LUV
AMR
DAL
JBLU
Industry
Market Cap:
12.44B
1.33B
713.46M
2.45B
635.40M
Employees:
32,847
96,400
70,600
4,704
5.30K
Rev. Growth:
7.50%
0.80%
-0.00%
57.20%
10.10%
6.36B
18.50B
14.54B
1.19B
1.46B
29.01%
21.18%
7.02%
39.34%
20.71%
902.00M
1.30B
158.00M
206.19M
158.97M
7.56%
-0.09%
-7.37%
12.56%
4.24%
284.00M
-482.00M
-2.86B
64.61M
N/A
EPS:
0.349
-3.027
-22.958
0.585
N/A
PE:
45.73
N/A
N/A
40.50
15.03
PEG:
2.53
N/A
N/A
2.69
0.81
PS:
1.90
0.07
0.05
1.93
0.31
Revenue:
Gross Margin:
EBITDA:
Oper. Margins:
Net Income:
Quarterly Financials
ROE
ROA
D/E
EPS
P/B
P/E
3rd Q
Sept 30/04
2.21%
1.06%
1.13
$0.15
2.14
90.80
2nd Q
June 30/04
4.30%
2.09%
1.06
$0.14
2.58
119.79
Market Trend
Commitments & Contingencies
contractual obligations and commitments
future purchases of aircraft
payment of debt
lease arrangements
primarily of scheduled aircraft acquisitions
from Boeing
28 scheduled for delivery in 2005, 22 in 2006, 25
in 2007, and 6 in 2008
$650Mill worth of accrued liabilites in 2003
Profitability
Valuation
Investment grade rating
P/E ratio > industry
PEG ratio > industry
EPS > industry
Low D/E ratio (not highly leveraged)
Market Cap > DCFCF
Current ratio, interest coverage, D/E >
industry average
Recommendation
HOLD
Showing of strong future growth
Cash Flows are not consistent
Seasonal, so expect price to go up during spring
Pretty consistent stock
31st consectutive year of profitability
Steady dividend for common shareholders
Not very leveraged, hedging of fuel costs limit exposure to risk
Safety in the Stock
Current ratio, interest coverage, D/E > industry average
Senior unsecured debt considered investment grade:
S&P, Moody’s and Fitch