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Two Ways To Play: Airlines Losing Their Wings


Strengthen your portfolio in good times and bad.

Bloomberg reports airlines in the US will continue to hike fares and add fees, despite declining energy costs.

In an interview today, AMR (AMR) CEO Gerard Arpey said "Despite fuel surcharges, despite fees, despite fare increases, every carrier lost money" in the third quarter. Domestic airlines simply aren't generating enough revenue to cover costs, Arpey said.

Arpey's statements mean that consumers are unlikely to have relief from higher ticket prices and new fees implemented last summer, when jet fuel soared to a record $4.36 a gallon. Since then, the price of fuel has tumbled by more than half - but is still averaging almost 60% more for 2008 than it did a year earlier.

See Ryanair Flies London to New York - for $13 for more on this.

From the Bull Pen: It's evident that airliners aren't able to make money during times of low or high energy prices. The bullish trades lie elsewhere - like in FedEx (FDX). One can consider this stock for an upside play on a pullback towards $60.

From the Bear Cave: For the bears, one airliner on the radar is Ryanair (RYAAY). See the stock approaching massive resistance near $25? One can consider initiating a downside position if and when it reaches that level.

Congrats to Hoofy and Boo for the Emmy nomination! Have a great night!
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No positions in stocks mentioned.

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