Text extracted via OCR from the original document. May contain errors from the scanning process.
From:
Sent:
To:
CC:
Paul Morris
; Vahe Stepanian
Subject:
Airlines stocks weak [C]
Attachments: Delta.pdf; Airline Weekly 6.26.pdf; pic16377.gif; pic21776.gif
Tazia Smith
7/2/2014 11:56:37 AM
Classification: Confidential
; Nav Gupta
Hi Rich - I'll let you decide whether you want to highlight to Jeffrey.
Airline stocks are down today (American is off over 3% and Delta is down -4.75% right now). This is
driven by Delta's traffic and margin commentary (see below). I spoke with our Airline analyst team and
bottom line, they believe near-term pressure is an entry point for clients to buy for the long-term. They
point to continuing improving business trends (even at the low-end of estimates, Delta's margins will be
up 300bps (-14% vs. 11%) year over year), continued stock buy-backs, and continued additions back to
indices etc as additional tailwinds for the shares.
Jeffrey is clearly already long the AAL, which DB has a 12mo target of 545 on. DB likes DAL shares here
with an implied —26% upside to their 548 target.
I don't know that Jeffrey needs/wants to add to his
airline exposure, but a similar risk reversal set up in DAL prices as follows:
DAL spot ref 38.45
s DAL Jan15 38 put —3.70
B DAL Jan15 38 call —4.15
actually like just selling puts too:
S DAL Jan15 37 puts —3.20 (collect —8% for 6mos, or create the stock at 33.80)
And of course could do something with AAL on weakness too.
All My Best,
Tazia
(See attached file: Delta.pdf)(See attached file: Airline weekly 6.26.pdf)
Forwarded by Tazia Smitl
on 07/02/2014 11:28 AM
From:
"Tazia Smith (DEUTSCHE ASSET MANAG)"
To:
undisclosed-recipients:;,
Date:
07/02/2014 11:26 AM
Subject:
(BFw) Delta Sell-Off 'seems Aggressive' Given Margin Guidance: C
(BFw) Delta sell-off 'seems Aggressive' Given Margin Guidance: C
oven
This has been prepared solely for informational purposes. It is not an offer, recommendation or
solicitation to buy or sell, nor is it an official confirmation of terms. It is based on information
generally available to the public from sources believed to be reliable. No representation is made that it
is accurate or complete or that any returns indicated will be achieved. changes to assumptions may have a
material impact on any returns detailed. Past performance is not indicative of future returns. Price and
availability are subject to change without notice. Additional information is available upon request.
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