TheStreet: UA (& AA, DL, ..) ... Stocks Tumbling Today After Downgrade
Apr 1, 2015, 10:27 am
#1
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TheStreet: UA (& AA, DL, ..) ... Stocks Tumbling Today After Downgrade
"Shares of United Continental Holdings (UAL - Get Report) are down 3% to $65.23 in early morning trading Wednesday after Deutsche Bank downgraded the airline to "hold" from "buy," and reduced its price target to $70 from $85."
http://www.thestreet.com/story/13098359/1/united-continental-holdings-ual-stock-tumbling-today-after-downgrade.html
http://www.thestreet.com/story/13098359/1/united-continental-holdings-ual-stock-tumbling-today-after-downgrade.html
Apr 1, 2015, 10:40 am
#3
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As of right now (11:33 central) both AAL and DAL are down more. UAL down 4.24%, DAL down 4.34%, and AAL down 4.74%. they downgraded pretty much the entire industry and oil is up over 4% with the market as a whole drop. This is hardly a UAL thing. "the street" news needs to be examined and taken in context of other pertinent variables.
Last edited by fastair; Apr 1, 2015 at 10:48 am
Apr 1, 2015, 11:07 am
#6
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Regardless of who got downgraded, the change in UAL stock price is in line with AAL and DAL, so investors are not necessarily punishing UAL any more than the competition
There's also a big spike in oil, big spike in VIX, and a big drop in 10-year note yield.
There's also a big spike in oil, big spike in VIX, and a big drop in 10-year note yield.
Apr 1, 2015, 11:12 am
#7
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Of interest to the Deutsche Bank downgrade was this (bolded below) observation about its expected forecast of a 5% loss in international PRASM due, in part, to foreign competitors increasing capacity: "The combination of a strong U.S. dollar, greater-than-expected capacity increases by non-U.S. airlines, and decelerating global GDP growth are likely to further pressure Deutsche Bank's 5% loss of international PRASM forecast for 2015, analysts explained."
(See OP's link for quote source.)
(See OP's link for quote source.)
Apr 1, 2015, 11:33 am
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There is a pronounced softening in the overall global economic picture and China's bubble continues to inch closer to an all-out burst. I think oil will spike up and drift back down as soft economic news continues to trickle in, but without strong economic growth and with an increase in capacity, the overall airline picture is beginning to look bleak.
Ultimately these so-called 'state sponsored' premium carriers will continue to slap their American competitors around forcing bad decisions around capacity and pricing, steepening the spiral downwards.
Sell Mortimer, sell!!
Ultimately these so-called 'state sponsored' premium carriers will continue to slap their American competitors around forcing bad decisions around capacity and pricing, steepening the spiral downwards.
Sell Mortimer, sell!!
Last edited by WineCountryUA; Feb 24, 2019 at 11:53 pm Reason: Removed OMNI comment
Apr 1, 2015, 12:14 pm
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yes, Airline stocks slip on Deutsche downgrade (link requires registration)
Deutsche Bank Downgrades Big Three Airlines (AAL) (DAL) (UAL)
Michael Linenberg, an analyst with the brokerage, lowered his rating on American Airlines, Delta Air Lines and United Continental Holding to ‘hold’ from ‘buy’.
Last edited by WineCountryUA; Apr 1, 2015 at 12:19 pm
Apr 1, 2015, 12:26 pm
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As of right now (11:33 central) both AAL and DAL are down more. UAL down 4.24%, DAL down 4.34%, and AAL down 4.74%. they downgraded pretty much the entire industry and oil is up over 4% with the market as a whole drop. This is hardly a UAL thing. "the street" news needs to be examined and taken in context of other pertinent variables.
Apr 1, 2015, 1:31 pm
#11
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yes, Airline stocks slip on Deutsche downgrade (link requires registration)
Deutsche Bank Downgrades Big Three Airlines (AAL) (DAL) (UAL)
Deutsche Bank Downgrades Big Three Airlines (AAL) (DAL) (UAL)
Apr 1, 2015, 3:06 pm
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Cowen & Co (Helane Becker) was the first to downgrade AA back in February. The writing has actually been on the wall for a while now, as evidenced by AA's poor traffic and revenue performance since last October. The repeal of the Wright Amendment has not been kind to DFW.
But now, there are indications that UA might be hurt by its increased reliance on international traffic. And DL might be in for a double hurt, as pressures on international traffic are compounded by capacity growth at SEA as well as new ULCC competition at ATL.
But now, there are indications that UA might be hurt by its increased reliance on international traffic. And DL might be in for a double hurt, as pressures on international traffic are compounded by capacity growth at SEA as well as new ULCC competition at ATL.
Apr 1, 2015, 3:41 pm
#13
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http://www.thestreet.com/story/13098...o&cm_ven=YAHOO
http://www.thestreet.com/story/13098...o&cm_ven=YAHOO
http://www.thestreet.com/story/13098...o&cm_ven=YAHOO
All three stories were basically identical.
Apr 1, 2015, 3:54 pm
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Strong dollar usually is tied to a very strong correlation to weak foreign sales. As the NUC is basicly the dollar, prices increase in foreign currency. So while US point of sale should increase, purchases where their currency has not kept up with the dollar would likely have a reduced demand (unless of course the prices fall overseas, then a decreased yield.)
Apr 1, 2015, 4:22 pm
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Strong dollar usually is tied to a very strong correlation to weak foreign sales. As the NUC is basicly the dollar, prices increase in foreign currency. So while US point of sale should increase, purchases where their currency has not kept up with the dollar would likely have a reduced demand (unless of course the prices fall overseas, then a decreased yield.)
Currency goes up. UA becomes more expensive. Foreign traffic goes down.
A whole cohort of "over-entitled elites" who were fired by Rainey are now enjoying OAL since loyalty isn't a driver of retention.
If those "over-entitled elites" were still loyal to UA when sources of foreign revenue are decreasing, wouldn't that help them?