The biggest news in the airline industry right now is the Department of Justice’s move to block the proposed merger deal between US Airways and American Airlines parent company AMR. While most of the discussion has surrounded what the effects on US Airways and American will be, this article focuses on the effects on the other large industry players. After the news broke, shares of all carriers were down more »
Airlines have hit their stride, with Delta Air Lines as the leader--the stock is up almost 90% since the start of the year. This has come as a surprise given that oil prices have spiked up almost 30% in the last 12 months. The main reason for strong stock performance has been the capacity discipline maintained by industry players. This has kept the margins higher and helped returns to move more »
The U.S. Department of Justice's lawsuit to block the AMR (NASDAQOTH: AAMRQ.PK) / US Airways (NYSE: LCC) merger comes after a string of airline combinations over the last several years. The DoJ contends that the merger is anti-competitive, seemingly regretting its allowance of past airline mergers to proceed. Now, AMR and US Airways are paying the price for being late to the party.
Unable to compete
AMR is currently more »
One of the best performing stocks this year is Spirit Airlines (NASDAQ: SAVE). Its share are flying high and approaching 100% appreciation at an astounding 82% growth year-to-date. With roughly four months still to go and Christmas holiday is coming, there is higher chance that it will surpass the 100% mark and beyond for this year. However, the ensuing months are not going to be an easy ride for the more »
There is still an opportunity to benefit from the projected growth trend in the airline industry, possibly by way of some lesser-capitalized companies. A screen of the most appealing industry investments in terms of revenue expansion and profit gains narrows the field to several smaller, more leisure-focused carriers.
After a strong price upturn across the sector thus far in 2013, these constituents still offer upside for the long haul.
First more »
Warren Buffet once said, “Beware of geeks bearing formulas.” Despite the oracle’s sage advice, there is one formula every investor should know. It’s very simple. Even Warren would agree: it’s so easy a caveman could do it. Here it is:
Profit = Revenue – Costs
Profit can be broken down into revenues and costs. A company can either raise profit by increasing revenues, or by decreasing costs.
The more »
Over the past decade the airline industry has shifted from widespread losses to small but growing profits by adopting two different pricing strategies simultaneously. Economy seats are sold as stripped downed commodities along side an array of optional fees. Premium seats are treated like luxury goods with airlines competing for customer loyalty based on service and amenities.
A Once Innovative Strategy That Hasn’t Kept Up
Until recently JetBlue Airways more »
Everything comes to an end. William Franke, the chairman of Spirit Airlines (NASDAQ: SAVE) has revealed his plans to sell his stake in the firm and resign from the board. The announcement was released just after the company has reported its quarterly earnings.
The Wall Street Journal has reported that William Franke is apparently trying to buy Frontier Airlines, which is owned by Republic Airways. Republic, which is heavy-loaded with more »
As we know, the airline industry is one of the toughest to succeed in. For one, its environment is highly competitive, given its low entry barriers. Moreover, the incentives to reduce fares in order to fill seats and not lose revenue push price competition to extraordinary levels. Now, regulations imposed by the Department of Transportation and rising crude oil prices pose a new risk to the carriers' profitability.
The U more »
An uncertain economic environment has considerably shrunk the US commercial air carriers market. Although the industry experienced an increase in traffic over the past three years, it has failed to achieve its pre-crisis levels in terms of passengers and available seat miles. High fuel costs and competition within the domestic market have forced airline operators to improve their utilization of available capacity in order to enhance profitability. Fewer flights with more »
On Friday, Mr. Market was down on the world's largest software company, Microsoft (NASDAQ: MSFT).
Shares of "Mr. Softy" fell nearly 12% after it reported its fourth-quarter earnings. The company missed analysts' expectations on both earnings and revenue. Sales of its Windows software disappointed. And Microsoft took a $900 million accounting charge related to its Surface tablet.
In contrast to Microsoft, airline companies are flying high. Shares of companies more »
The economy is slowly recovering from the recession of 2008 and 2009. The consumer sentiment index is at multi-year highs. Therefore, this is a great time for investors to buy stocks. Diversification is of utter importance, and one sector that could bring capital appreciation to your portfolio is the airline industry.
Despite the recent events involving aircraft accidents, traveling by airplane is regarded as a safe form of traveling.
I more »
The airline industry is rebounding from the severe hit it took in 2007-2008, in part from economic growth. GDP readings are okay considering we are coming out of the recession, and the consumer sentiment index is at multi-year levels. As a result, most airlines are seeing strong passenger traffic. Therefore, it is a good idea for you to gain exposure to the rising sector.
Boeing has been involved in several more »
Several industries pose huge potential for profit increases in the years ahead due to the steady economic recovery that looks poised for long-term growth. The airlines industry is one of the plays that could have your profits soaring. While shares have spiked considerably this year, there is still a lot of room for growth. Morningstar estimated that airline use is still down by about 10% since 2008, and this represents more »
The airline industry has been rebounding from its lows of 2007 and 2008. Higher consumer sentiment readings have propelled stronger passenger traffic in most carriers. Revenues are strong and airlines are showing outstanding growth. Hence, investors should pick the airlines that have the highest probabilities of bringing capital appreciation for growth portfolios.
Dividends and Share Repurchases
The Light at the End of the Tunnel
Ever since the airlines hit rock bottom in 2008, there has been steady growth from these three big airline companies. Southwest Airlines (NYSE: LUV), Delta Airlines (NYSE: DAL), and Alaska Airlines (NYSE: ALK) have each been reporting positive year over year revenue growth and profit margins, however only one is investment worthy.
Currently Southwest is trading at a multiple of more »
The airline industry is known as one of high costs. Whether it’s in purchasing aircraft, leasing aircraft, paying a large workforce, or buying fuel that changes in price on a daily basis, the costs of running an airline are quite high. So it has been no surprise that airlines have not ascended to be dividend kings, dividend aristocrats, or even dividend commoners. However the airline industry today is stronger more »
It’s probably one of the least likeable things about airlines. The idea of overbooking allows airlines to sell more seats than there are on the plane in the hope that not everyone shows up and the airline can make money on the tickets for which passengers never showed. But it doesn’t always work out so great for passengers, especially those who are bumped. While only a fraction of more »
Airline stocks have historically been bound by moves in the oil markets; thus, as we see oil inventories rising, it could be time to take a look at the high-flying airline stocks, in part because airlines have historically traded inversely to oil, so falling oil prices are a big positive for airline stocks.
In the latest Energy Information Administration data, crude oil inventories rose 300,000, compared to the expected more »
I have been a lifelong American Airlines customer when flying in the US, however, recently I have started to look at JetBlue as it is a common sense low cost option. Most airlines in the western world today are characterized by large inefficiencies, high costs, and zero profits. Jet Blue is the airline that bucks the trend.
Combining quality with low prices
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