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> Why don't airlines simply pocket the difference?? I think they did, AA has a market cap of $8B and they spent $12B on stock buybacks from '14 - '20. Looks li
by tehwebguy 4y ago
> Why don't airlines simply pocket the difference??
I think they did, AA has a market cap of $8B and they spent $12B on stock buybacks from '14 - '20. Looks like all other domestic airlines did similar.
> That's why despite airplanes becoming extremely fuel efficient over the last 50 years, ticket prices keep dropping.
I think they just rearranged their profit centers. Having good prices, flight coverage, loyalty program & interchange agreements are the core product offering but they'll happily use them as a loss leader for the revenue from their agreements like branded credit cards via Citi & Barclay.
- pjscott 4y agoA large market cap and significant profits don't imply large profit margins. Look at Walmart for example: their market cap is over $300B but their net profit margins are in the 2-3% range.
- adolph 4y ago> AA has a market cap of $8B and they spent $12B on stock buybacks from '14 - '20. In 2014 their market cap was $35B [0]. Pandemic aside, it looks like they are steadily winding down their business. That makes sense if the company doesn't see any opportunities for growth--shareholders can migrate to investments with upside. Despite market cap shrinking by 2/3 they kept earnings per share relatively flat. https://www.macrotrends.net/stocks/charts/AAL/american-airlines-group/market-cap https://www.macrotrends.net/stocks/charts/AAL/american-airli...