JetBlue’s Future

[HeyEng]

Mildly related but I was talking about this yesterday with my CA when home ownership came up and how expensive it can be. As much uncertainty as there is, we’re incredibly lucky. Our AC unit is probably at the end of its life and if it went out it would be “ugh, that’s annoying” and probably cutting a check begrudgingly. For the average person that would be financially catastrophic.

We recently replaced our roof which was about 13 years old...getting real close to aging out. We had a hail storm that came through and trashed the roof and USAA wrote a $72,000 check to replace it. I hated filing a claim (first one ever in my life), but I have to admit...writing a check for that amount would have been painful.

 

[///AMG]

We recently replaced our roof which was about 13 years old...getting real close to aging out. We had a hail storm that came through and trashed the roof and USAA wrote a $72,000 check to replace it. I hated filing a claim (first one ever in my life), but I have to admit...writing a check for that amount would have been painful.

Why do you hate filing a claim??

 

[Cushion Rider]

We recently replaced our roof which was about 13 years old...getting real close to aging out. We had a hail storm that came through and trashed the roof and USAA wrote a $72,000 check to replace it. I hated filing a claim (first one ever in my life), but I have to admit...writing a check for that amount would have been painful.

Wow.....$72k for a roof? Must be a lot of surface area and tiles or fancy shingles. My house in TX was $42k, but it did have the very thin composite shingles.

Lucky for you, the hail storm came just as the roof was aging out. And, nice that USAA ponied up!

For $72k, file the claim (not sure what your premium might do going forward). Good on you. Nice!

 

[CoffeeIcePapers]

Why do you hate filing a claim??

There are only a few companies who will insure homes these days. You risk getting dropped or paying huge premium.

 

[Richman]

Wow.....$72k for a roof? Must be a lot of surface area and tiles or fancy shingles. My house in TX was $42k, but it did have the very thin composite shingles.

Lucky for you, the hail storm came just as the roof was aging out. And, nice that USAA ponied up!

For $72k, file the claim (not sure what your premium might do going forward). Good on you. Nice!

First of all, the insurance-contractor circle is ridiculous. People will figure out what the max extent of your insurance will pay, and charge that.

Understand that, and you understand the basic economics of every failing plan behind insurance, health or otherwise, as well as why universities are in the same category as health care insurers.

Second…if I was king for a day, and thank your personal gods that this will never happen, I would make school loans fully dismissible in bankruptcy, and make the institution that sponsored the loan responsible for the resulting subrogation.

That aside, building codes can be a beotch. After Andrew, Florida coastal building codes went nuts. A tiny 2000 sqft home was running about $40k to replace with nothing special. Anything tile related would be $60+.

Want to save money? Move away from the coast. Duh.

 

[jtrain609]

First of all, the insurance-contractor circle is ridiculous. People will figure out what the max extent of your insurance will pay, and charge that.

Understand that, and you understand the basic economics of every failing plan behind insurance, health or otherwise, as well as why universities are in the same category as health care insurers.

Second…if I was king for a day, and thank your personal gods that this will never happen, I would make school loans fully dismissible in bankruptcy, and make the institution that sponsored the loan responsible for the resulting subrogation.

That aside, building codes can be a beotch. After Andrew, Florida coastal building codes went nuts. A tiny 2000 sqft home was running about $40k to replace with nothing special. Anything tile related would be $60+.

Want to save money? Move away from the coast. Duh.

View: https://youtu.be/rMjjsjNBS_4?si=pFM52qVnDe6VhKjr

 

[Skåning]

Those numbers are atrocious, but nobody is talking about the perilous situation American finds itself in.

American Airlines Dropped From The Dow Transportation Average After Long-Term Decline - View from the Wing

American Airlines has now been dropped from the Dow Jones Transportation Average, two years after being kicked out of the S&P 500. Its stock price had fallen so far that it carried less than 0.5% weight in the price-weighted index — while Delta, United, Southwest, and even Alaska remain.

viewfromthewing.com

 

[Kingairer]

Stock market performance at AA has underperformed and they havent made as much money as they should have when times were (are) good, but theybe been profitable, so I do not consider them in a "perilous" condition at the moment. We'll see how Don Cheetos war treats AA, but they have plenty of liquidity and have paid down a huge amount of debt to bring it to a more manageable level.

 

[HeyEng]

Wow.....$72k for a roof? Must be a lot of surface area and tiles or fancy shingles. My house in TX was $42k, but it did have the very thin composite shingles.

Lucky for you, the hail storm came just as the roof was aging out. And, nice that USAA ponied up!

For $72k, file the claim (not sure what your premium might do going forward). Good on you. Nice!

I was pleasantly surprised that my premium went down more than 50% and that is probably because of the class IV shingles (just old school GAF asphalt; same as previously installed). Oh, and I forgot one of the supplements, so in the end, USAA wrote a check for $78K.

Looking at the paperwork, it was 68 squares for 6800 SF of surface area. The house isn't *huge* (3000 SF living area and 1000 SF garage // single story) but with a 12/12 pitch roof, well....that is a lot of shingles. It also included replacing ALL the decking (code upgrade), gutters/downspouts and about $10K for a large copper covered dormer.

Lots of folks had told me I would save money going with another company, but I have nothing but good things to say about USAA. They made the process way, WAY easy and well...not much else I can say, except I'm not changing carriers.

 

[HeyEng]

There are only a few companies who will insure homes these days. You risk getting dropped or paying huge premium.

I initially didn't want to file a claim because of the age of the roof and the risk of a denial being stuck on my CLUE report. We have a neighbor who is now paying through the nose for 3rd rate coverage because of too many inquiries about "will insurance cover XYZ?" and I am not in favor of that.

I knew if the claim was accepted, I wouldn't be subject to cancellation because of the "Act of God" clause/protection which basically gives me a freebie.

I had an idea that my premium would go down, but not as much as it did.

 

[jtrain609]

American Airlines Dropped From The Dow Transportation Average After Long-Term Decline - View from the Wing

American Airlines has now been dropped from the Dow Jones Transportation Average, two years after being kicked out of the S&P 500. Its stock price had fallen so far that it carried less than 0.5% weight in the price-weighted index — while Delta, United, Southwest, and even Alaska remain.

viewfromthewing.com

Yeah funny, I also saw that this morning and thought about my commentary about American.

 

[killbilly]

I was pleasantly surprised that my premium went down more than 50% and that is probably because of the class IV shingles (just old school GAF asphalt; same as previously installed). Oh, and I forgot one of the supplements, so in the end, USAA wrote a check for $78K.

Looking at the paperwork, it was 68 squares for 6800 SF of surface area. The house isn't *huge* (3000 SF living area and 1000 SF garage // single story) but with a 12/12 pitch roof, well....that is a lot of shingles. It also included replacing ALL the decking (code upgrade), gutters/downspouts and about $10K for a large copper covered dormer.

Lots of folks had told me I would save money going with another company, but I have nothing but good things to say about USAA. They made the process way, WAY easy and well...not much else I can say, except I'm not changing carriers.

USAA is a fantastic insurance company....

....and a relatively decent bank....

...and a right awful, horrible, mortgage company.

 

[Maurus]

We’re some of the last labor groups doing exceptionally well, in comparison to other fields. If the Middle East thing keeps up, you’ll see a lot of the irrational exuberance change to fear overnight because we’re all starting to lose pricing authority. We need to charge more because of fuel costs, but then you out-price cash-strapped customers.

As long as the customers don't watch Caleb Hammer they will still use their credit cards thus subsidizing the larger airlines through high fuel prices. In the past this wasn't as a large of a factor. I honestly think this is one reason many smaller airlines are taking huge hits. Why sign up for a JB credit card when you can get a Delta, United, or AA card and fly pretty much anywhere in the world?

 

[Maurus]

It boggles my mind that the zeitgeist of the internet is that a company with $8 billion in cash and assets is going to declare bankruptcy by the end the year.

What do you think will happen if assets start getting sold off?

Of the 16B in cash and assets only 1.86B is in cash.

JB has seen a trend (since covid) of increased losses YoY. Last year there was a decrease but the Iran war may have reversed that improvement. Also, seeing that JB had a nearly 50% increase in their losses last quarter with pre-war fuel prices that doesn't exactly look good.

AA is going to have troubles as well. They absolutely are not in good shape with far more liabilities than assets. They are, however, bleeding at a much slower rate (relative to size). JB is a fraction of the size of AA and posted similar losses last quarter (~300M each). Q1 obviously always underperforms compared to the rest of the year so future quarters may not be as bad but if the trend continues that will be a 900M loss on the year plus the increased fuel costs.

Will JB file by the end of the year? I think it is possible as long as Trump continues his mission of "peace." We haven't even seen the full impact of increased fuel prices on the aviation sector yet so it is hard to judge. We shall see in a month.

As you know, Chapter 11 doesn't necessarily require you to be insolvent. Some Circuit Courts have additional standards in place but generally if you can prove you will be insolvent you will be able to restructure under Chapter 11.

I think it is fine to be optomistic but it is also good to be prepared for the worst. I hope I am wrong.

 

[DropTank]

Honest question, no sarcasm:

Are we on the cusp of an airline crunch?

Because those numbers are really bad.

 

[CoffeeIcePapers]

It boggles my mind that the zeitgeist of the internet is that a company with $8 billion in cash and assets is going to declare bankruptcy by the end the year.

Is bankruptcy eventually a threat? Yes. Does that threat exist right now? No. Does JetBlue hold a significant amount of debt? Yes, close to $9 billion last time I looked.

Will JB file by the end of the year? I think it is possible as long as Trump continues his mission of "peace." We haven't even seen the full impact of increased fuel prices on the aviation sector yet so it is hard to judge. We shall see in a month.

It's not the debt load, it is the fact that they haven't turned a profit since 2019 that is concerning people. They've pulled back forward guidance, but are still projecting a profit this year. What killed Spirit was a giant balloon debt payment that came due last year. Jetblue seems to have one in 2029. Unlike Spirit, they have the cash and liquidity to weather the storm and still have plenty of time to turn it around.

 

[jtrain609]

It's not the debt load, it is the fact that they haven't turned a profit since 2019 that is concerning people. They've pulled back forward guidance, but are still projecting a profit this year. What killed Spirit was a giant balloon debt payment that came due last year. Jetblue seems to have one in 2029. Unlike Spirit, they have the cash and liquidity to weather the storm and still have plenty of time to turn it around.

As you state, Spirit had no liquidity or unencumbered assets. What killed Spirit was having no assets to leverage against. They leased everything, and while there are certain tax advantages for doing so, it provides no margin for error when times get tough.

The other aspect of this is that corporate finance is not the same as personal finance. Corporations have other levers to pull when it comes to refinancing debt. The folks who hold that debt would much rather have it paid over a longer period of time, even at a lower interest rate, than having it wiped out in bankruptcy.

 

[///AMG]

USAA is a fantastic insurance company....

....and a relatively decent bank....

...and a right awful, horrible, mortgage company.

Yeah I continue to be pretty happy with their insurance policies. Have had several good experiences, specifically with auto insurance. Though I did recently switch a couple of my cars over to Hagerty agreed-value policies.

 

[HeyEng]

USAA is a fantastic insurance company....

....and a relatively decent bank....

...and a right awful, horrible, mortgage company.

I guess the mortgages are still a • show, eh? When my wife was doing the real estate thing in San Antonio, she hated dealing with them and well...being a very large mil town it was a necessary evil.

I have also banked with them since 1993(4)'ish and haven't had any issues but they have been in trouble a handful of times with regulators and they were got hemmed up acting like some of the assclown banks (like BoA, Wells Fargo, etc).

Insurance? Fantastic. Then again, there are 3 "tiers" if you will (not really tiers, just different subsidiaries) and even though I was an enlisted sweaty, I am now in the highest of the tiers which might have something to do with it.

OK...sorry about the thread drift. Back to the discussion about airlines and how they are a great way to lose exorbitant amounts of money...

 

[Maurus]

Corporations have other levers to pull when it comes to refinancing debt.

Those levers can be very fickle though. People with money to lend/invest scare easily.