Are airline stocks at their lowest?

[vanzandt]

you don’t get it. AI and technology only add to profits when the savings they provide aren’t passed to the customer. .

I disagree with that. You don't understand the behind the scenes complexities of running an airline. Sure AI saves a warehouse money by automating and streamlining an operation, and hence those savings drop to the bottom line... but we are not making an apples to apples comparison.

There are million variable factors that come into play. Historic weather models are a biggie. Hell they'll only put the absolute minimum fuel on board a jet at one location to save a few pennies, and at another location they fill one to the brim where jet-A is cheaper and tanker thousands of pounds just so they don't have to pay the price at the hub. Or vice-versa if the hub is cheaper that day. And even in THOSE calculations... they even calculate the additional fuel burn for the added weight on the the tanker legs to make sure they are actually saving money.

I'll do some digging tomorrow. Hell I bet Gordon Bethune probably did a Ted Talk on it at some point, he's always spouting off about things.

 

[newwurldmn]

I disagree with that. You don't understand the behind the scenes complexities of running an airline. Sure AI saves a warehouse money by automating and streamlining an operation, and hence those savings drop to the bottom line... but we are not making an apples to apples comparison.

There are million variable factors that come into play. Historic weather models are a biggie. Hell they'll only put the absolute minimum fuel on board a jet at one location to save a few pennies, and at another location they fill one to the brim where jet-A is cheaper and tanker thousands of pounds just so they don't have to pay the price at the hub. Or vice-versa if the hub is cheaper that day. And even in THOSE calculations... they even calculate the additional fuel burn for the added weight on the the tanker legs to make sure they are actually saving money.

I'll do some digging tomorrow. Hell I bet Gordon Bethune probably did a Ted Talk on it at some point, he's always spouting off about things.

I had several profs who went to the airline industry when I was a masters student.

I get the complexity. That complexity has existed forever. Solving it doesn’t increase profitability for an entire industry as someone will pass the cost savings to the customer UNLESS there is price collusion. And that can only happen if there are few players in the market.

 

[vanzandt]

you don’t get it. AI and technology only add to profits when the savings they provide aren’t passed to the customer..

I mean I get what you're saying, but how does AI telling DAL flight-ops that flying 150 seat 757 into Peoria instead of an RJ on the third weekend of Oct for the annual Peoria Pumkin-Fest (because they know they can fill every damn seat)... not add to the bottom line?

 

[vanzandt]

I had several profs who went to the airline industry when I was a masters student.

I get the complexity. That complexity has existed forever. Solving it doesn’t increase profitability for an entire industry as someone will pass the cost savings to the customer UNLESS there is price collusion. And that can only happen if there are few players in the market.

Ticket prices are only part of the picture. The bottom line can be vastly improved also by cost savings that can vary week to week, and these are savings that would take thousands of humans thousands of hours to figure out as there's just so many variables.... all the while keeping ticket prices at the exact same level.... be it low or high, competition or no.

 

[newwurldmn]

I mean I get what you're saying, but how does AI telling DAL flight-ops that flying 150 seat 757 into Peoria instead of an RJ on the third weekend of Oct for the annual Peoria Pumkin-Fest (because they know they can fill every damn seat)... not add to the bottom line?

because 1. They each have a thousand PhD’s trying to figure that out.
2. any technological advancement would be realized would be realized by all airlines - in a pre-consolidation world, one of them would use it to lower ticket prices to get more customers.

I will pm you something after I put the kids to bed

 

[vanzandt]

because 1. They each have a thousand PhD’s trying to figure that out.
2. any technological advancement would be realized would be realized by all airlines - in a pre-consolidation world, one of them would use it to lower ticket prices to get more customers.

I will pm you something after I put the kids to bed

Not if those airlines don't own gates there. That goes back to Sig's fixed costs.
Either way, I know you know wtf you're talking about so I certainly enjoy the diatribe.

edit: I have to put you on "follow" to get a PM. Done.

 

[Captain Caveman]

because 1. They each have a thousand PhD’s trying to figure that out.
2. any technological advancement would be realized would be realized by all airlines - in a pre-consolidation world, one of them would use it to lower ticket prices to get more customers.

I did a project away back for a European airline company. My PhD was mathematics and I specialised in Numerical optimisation, It's a heck of a complex problem with thousands of variables and we use a lot of advanced mathematical techniques to try optimise airline efficiency. Used matlab a lot
You can google the Travelling salesman problem to get a brief overview of what I am talking about if your not familiar with the area

Interesting area of science, wished I stayed at it at times . I thought about applying it to trading but never got round to looking at it

Side note, it's amazing how so many smart guys' work is never utilised and just get shelved away in a university library collecting dust. For example the math used in finance is still very rudimentary. Although it appears that the USA is better at linking academia to commercial.

 

[vanzandt]

Anyway, 3 months later...

Loyal members of the VZ chat-room ($7.99/month... paid to you)... were informed today to load up on LUV.
If it goes down from here, keep buying more.

For real though, everything looks really bad right now regarding covid. Today was the sell-off on LUV I'd been waiting for. Of all the airlines... this one is NOT going away and the balance sheet is pretty damn solid compared to the legacy carriers and their international exposure. I love DAL and its CEO Bastion, but their cash burn... its a fact of life.

I suppose it can keep going down in theory, but I think today's $40.39 low might just prove to be the 52 week low... 51 weeks from now. Or damn close.

I would have liked to see more volume however, but lets see what the next few days bring.

Air travel is not going away. Especially domestic. No one is driving from Phoenix to Nashville for granny's funeral.
Prices will rise, Southwest will thrive.
-vz

 

[newwurldmn]

Anyway, 3 months later...

Loyal members of the VZ chat-room ($7.99/month... paid to you)... were informed today to load up on LUV.
If it goes down from here, keep buying more.

For real though, everything looks really bad right now regarding covid. Today was the sell-off on LUV I'd been waiting for. Of all the airlines... this one is NOT going away and the balance sheet is pretty damn solid compared to the legacy carriers and their international exposure. I love DAL and its CEO Bastion, but their cash burn... its a fact of life.

I suppose it can keep going down in theory, but I think today's $40.39 low might just prove to be the 52 week low... 51 weeks from now. Or damn close.

I would have liked to see more volume however, but lets see what the next few days bring.

Air travel is not going away. Especially domestic. No one is driving from Phoenix to Nashville for granny's funeral.
Prices will rise, Southwest will thrive.
-vz

I’ve read that business travel is forever changed.

I don’t buy it. Zoom will kill the conference call but can’t kill in person interaction.

I’ve been long UAL for several months

 

[Sig]

I’ve read that business travel is forever changed.

I don’t buy it. Zoom will kill the conference call but can’t kill in person interaction.

I’ve been long UAL for several months

Remember air travel was going to be forever changed after 9/11 as well. I guess it was forever made more inconvenient by TSA, but the industry did far better in the 15 years after it than the 15 years before so I'd tend to agree with you. The problem, as I mentioned before, is that most of the companies went through a chapter 11 so the shareholders who bought after 9/11 now have nothing despite the airlines they bought shares in being very successful eventually. It seems pretty likely that will happen again, to at least a couple of the U.S. big 3 (I go with AA then UA then DL in that order for chap 11) if we don't have a good vaccine that people actually take by spring of 2021. The chances of that now are much higher than when this thread started, given the burn rate of each of the airlines. So asking if air travel will come back is kind of the wrong question. We should be asking if air travel will come back fast enough to keep the airlines from all filing for chapter 11/22/33/44 or whatever iteration they're on now with their multiple reorganization bankruptcies.