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Archive for the ‘profit and loss’ Category

CNBC still hot on airline stocks

CNBC keeps noting that airline stocks may be a good buy for 2010. Delta and United were the top two picks and have the potential to increase 50%. They are cautious on Southwest (LUV) due to the fact of increasing ticket prices that will try to absorb non fuel related costs.

Thanks British Airways

Well, it seems like the BA cabin crew will go on strike. I talked about this a month ago stating that the BA cabin crew folks are upset about a 2010 pay freeze, 3,000 full time employees switching to part-time, and a decrease in employees on long-haul flights out of Heathrow.

BA is not taking legal action against the cabin crew union, unite. The proposed 12 day strike will start on December 22 and conveniently disrupt peak holiday travel for BA customers. BA is already taking refunds on tickets and has a battle plan in action, if the strike occurs.

Why is this happening? Well, BA is feeling the pinch of the global economic crisis and since the airline relies on premium, long-haul traffic, they are now having a tough time filling those front end seats. As well, high oil prices and insane labor contracts have hampered this once cash cow airline.

It looks like a strike will happen and BA will lose any shot at making a profit this month and passengers will be ticked.

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Airline stocks still hot

CAL up 35% in the month, DAL up 10% this week. The NYSE ARCA shows an increase of 25.62% This is all attributed to lower fuel costs, lower capacity, and fares staying put. CNBC analysts remain bullish on jetBlue stock and Alaska Air stock. I think airline stocks stink, but the past month shows differently.

airline stocks are hot

This week, CNBC keeps harping on airline stocks. Personally, I think they are terrible, no matter what the case. But they have increased roughly 6% since Monday and keep climbing. I think some of this is due to lower oil costs right now and a slight uptick in future bookings. Big question remains: will oil stay in the $75-$85 range? Also, it’s great that planes are filling up, but is the yield really that good?

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CNBC picks: UAUA, JBLU, AMR

CNBC keeps talking about United, American, and jetBlue as good stocks right now. I don’t buy it, but they are increasing over the past week. Maybe the airlines got it right, finally?

 

 

Singapore Airlines, CEO, on CNBC

One of the coolest CEO’s in the world, Chew Choon Seng, of Singapore Airlines was on CNBC discussing his airline. He remained positive on SIA’s business strategy and ability to manage capacity, while taking a premium yield. Here are some highlights of the interview.

–Singapore Airlines is the largest airline in terms of market capitalization.

–USA still remains a strong priority, UK market is very weak.

–China and India are the strongest markets.

–Seng says there is too much global capacity.

–Seng says there is a need for governments to change old rules, and allow for cross-border consolidation. That will help industry.

–Airline hedged at $100, 22% hedged at end of Oct. 2009.

–Management needs to keep eye on capacity and keep costs low.

–Business travel has recovered a little bit.

–Tough to manage fuel hedging, and risk of locking in at a high price.

Seng seems like a great guy. I know he wants to invest more, especially in the USA.

CEO Seng

 

 

 

 

 

 

Gulf Air, Samer Majali, new direction

Reuters is reporting that Gulf Air will make a shift in strategy that will focus the carrier on Middle East regional flying, and the airline will scrap most long-haul routes. The carrier plans to purchase smaller jets, like,  the Airbus A320 series and the carrier will consider even smaller regional jets, like the Bombardier C-Series. This new strategy is headed by the CEO, Samer Majali, and he hopes to return the carrier to profitability in 2012.

This new platform is really the last chance Gulf Air has in its checkered life. Many former Gulf Air CEO’s have taken the airline in different directions, only to piss off local government investors, that eventually gave up. The new Middle East focus may have made sense a few years ago, but now you have intense competition. Qatar Airways and Emirates have built up a strong regional presence, and low cost carriers, such as, Air Arabia, flyDubai, Bahrain Air, Wataniya Airways, and Sama Airlines are all staking their claim on the market.

Then you have Royal Jordanian and Egypt Air, shifting their focus on the short-haul Middle East routes and giving up their long-haul strategies. Both carriers are backed by Star and One World, and have ample cash in their coffers.

So, will this new Gulf Air strategy work? It is too soon to tell, but if you take a look at its history, things do not look good. The Middle East market shows promise, but you have several well established carriers fighting for market share; is there really room for another? I don’t think so. Of course, the oil rich Gulf states want their own airline, so maybe Bahrain will keep pouring in money to Gulf Air, but I seriously doubt this airline will be a game changer. Rather, look for it to remain a confused, loss making machine.

 

loss maker