Fri, Mar 13, 2009
Stocks Holding Their Own As Blue Chips Fall
Stock analysts who for years have been turning up their noses at
the airline industry are now forced to acknowledge that, in a time
when blue chips are tanking, airlines don't look so bad as an
investment.
Having come through a decade-long gauntlet of the 9/11 attacks,
the SARS and Bird Flu scares, bankruptcies, mergers and last year's
crippling oil price spike... US domestic airlines are widely
projected to have a profitable year. They even look good against
foreign competitors, as the US dollar's recent strength against
foreign currencies has had the effect of lowering fuel costs for US
carriers.
But Reuters reports influential analysts still aren't giving the
industry much respect. Of the capacity cuts which positioned
airlines to do well this year, independent analyst Michael Boyd
suggests that what looks like successful strategy was dumb luck,
with capacity cuts planned to battle oil prices happening to come
just in time to match falling demand.
"That was only serendipity... They didn't see the demand drop
any more than anybody else," Boyd says.
Morningstar analyst Basili Alukos predicts that as demand falls
further, airline stocks will not continue outperforming the overall
market. "The industry is so dynamic it could change on a dime,"
Alukos said.
Independent airline consultant Robert Mann is especially cynical
about current airline stock prices. "It may never occur again.
Enjoy it while it lasts."
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