Airline stocks

[generaltso]

Are any of these airline stocks good investments right now?

I mean you look at AMR, which was $1.50 last week and is now up to $3.63. I think there is a huge upside potential on them, but a risk that they may go Chap 11.

If they survive this downturn, the stock should get back to the $20+ days... but I guess the question is can they survive?

I guess it is just weird seeing all these stocks so low. NWA and CAL are both in the $6 range. DAL is holding right around $10.

Anyone have any guesses about which has the brighest future, from a stock holder perspective? It is so temping to jump on AMR at that price.

 

[contactapp]

I own Southwest. If you are looking for something more secure.

 

[generaltso]

I don't think that right now, LUV has the upside that the other airlines do. But your right it is a safe bet.

 

[Gulfstream 200]

sure, throw a few bucks at it and take a chance.....
but I would say any real return will be a long shot at this point! The way I look at it is that analysts spend all day and night trying to figure what these companies are going to be worth and still NOBODY wants to touch these dogs!!

It think its far beyond ending the war and getting oil prices low again.

People simply like riding SW, JetBlue, airtran etc.. better than they do UAL, DAL, AMR. I truly think people are sick of the crappy service they offer! I know I will go OUT OF MY WAY to get on a jetblue flight before stepping foot on some old noisy DAL or AMR piece O Crap with old haggy rude F/A's! Nevermind the price savings myself or my company gets...
Maybe its old fashioned, but good service goes a long way to the average passenger! (and investor I guess!)

 

[daddysquared]

Aren't airlines always that last to recover from an economic downturn? If you do buy airline stocks, buy a basket of them. Some won't make it out, but the ones that do will reward investors over the long run. Personally I just got stung on the US Airways deal. Not bad though. Picked up some shares at $.27. They just came out of bankruptcy, and as per their Chap 11 deal, their common stock was cancelled. I had never heard of that happening before. I thought that they would either be bought out or get liquidated.

 

[typhoonpilot]

Stay away from AMR stock. You are right in thinking the time to buy was $1.50, but that time is past. If you had I would highly recommend selling at this price. AMR will go bankrupt and the stock will eventually be worthless like USAirways. If you really want to play this risky game wait for Delta, Northwest or Continental to get in the $1.00 to $2.00 range and then buy them for the short bounce they always seem to have when people mistakenly believe they will avoid bankruptcy. The other part of the large percentage rise you see in stocks like these is caused by the shorts getting out of their positions. That has happened at USAirways, United, Enron, and countless others over the last few years but it is difficult to time it right.

Typhoonpilot

 

[2Green]

I'm in your camp, General, and I understand your approach. I have been asking myself the same question for several weeks. "What airline stocks should I buy"? The industry has been thoroughly beaten and I agree there are bargains out there.

I have done a little research and here's my take: There seems to be a consensus amongst the Wall Street "experts" (whoever that is) as to who the "buys" are right now. They seem to like DAL, NWAC, and CAL. I've narrowed my choices to DAL and NWAC because they are supposedly the furthest from bankruptcy. DAL closed today at 9.73. 52 week high of 31. NWAC closed at 6.49. 52 week high of 21. The reason they like them is their staying power. If I can get DAL at 9 or NWAC at 6 on a down tick, then I'm in. With oil prices falling there may not be much more down side. It may take 5 years to reach those 52 week highs but you've tripled your money. These are mad money long shot plays for me and represent a very small part of my portfolio. I won't be surprised if I lose it. Someday, whenever that is, the airlines will be back in favor.

Daddy makes a good point. I've heard the basket approach and that may be something to consider. He also pointed out that some will make it out and some won't. Find the ones that will be there to pick up the pieces. Can you imagine how many pax will be out there is UAL goes TU? Combine that market share with the normal cycle and the remaining airlines should make out well. Companies that are "considering" bankruptcy or "hiring a bankruptcy attorney" are ones I don't want to deal with. i.e. AMR. They are already closer than you and I know.

Southwest, Jetblue, and Airtran have a great thing going. The problem is that the secret is out, plus they are Wall Street darlings. Watch CNBC, they mention those three in one breath as if they are one company.

If you want something safe, buy Southwest and be done with it.

Of course, if I were a genius I wouldn't be a pilot.

 

[stillaboo]

James Parker

Mr. Parker is the leading airline analyst (seriously, he really is the #1 analyst), and he recently did a growth airline conference. Had very good things to say about Southwest, Jet Blue, AirTran, easyJet, Mesa, Skywest, Frontier, Ryan Air, Midwest Express, Frontier, and ExpressJet.

Some of these guys have done well since the conference, most have not. Even for the best in the business, it's a crap shoot. If you follow the internet boards closely though, you can pick up things before they go public. That, coupled with insider purchases, has helped me in the past.

Like Mesa. Most pilots have reservations about their new contract, but it has set them up for great growth potential and is very strong from an investor standpoint. If you knew about the contract (and most pilots in the regional industry did, as well as anyone who reads the regional forum of flightinfo), you could see that it was going to go through, and could have bought in before it was agreed to. John Orenstein, Mesa's dreaded CEO, bought 11,200 shares of it in a 7 day period in March. Coincidence it's up 66% since? I think not!

A perfect example of us pilots having the info and not using it to our advantage.