The airline stocks bottom-fishing thread

better to go long aerospace. I'm long ERJ. BA may hold some real value. Enough emerging market carriers will pick up the slack for falling demand, particularly for fuel efficient jetliners.

Airlines are always so speculative. ERJ and BA are real value investments. I'm aware that Steinhardt made a killing betting on airline consolidation. But that's real speculative.

I'm long ERJ, short CAL and UAUA, BTW.
 
for a small position short term trade it's done well for a

for 200 million dollar investment====no way!!!

institutions who burned over a billion on an industry that has gone through 2 chapter 11 in the past are NUTS!,...NUTS i'll tell you.

this industry is heavily in debt with extremely fixed cost and variable cost..oil hits $200/barrel and it's over for airlines.

as an investment it's sucks.



Quote from Cutten:

Things are pretty bleak for this sector, which is usually the precursor of a secular low. With oil almost $150, the economy going down the shitter, and credit harder to access than a nun's knickers, we're pretty close to a perfect storm for the industry. Many of the conditions for a major, multi-year low are present. For example:

1) Atrocious economic conditions for the sector
2) Sector stocks trading at distress valuations
3) Many businesses going bankrupt
4) Deep value investors are into the sector (too early, as always)

To make a low, I would want to see the following conditions met as well:

5) Sentiment getting extremely bearish
6) A major capitulation/panic day on large volume
7) Some kind of shocking news headline affecting the sector e.g. one of the largest carriers going bust
8) Major purchases by insiders

So, this thread is for people to discuss the best way to play the forthcoming bottom in airline stocks. I'd recommend we focus on the following issues:

i) what stocks would be best to play the bottom, recovery, and eventual boom several years down the line
ii) stocks that are going to $0 via bankruptcy - both to avoid, and to short either outright or as hedges for longs.
iii) how to time the low
iv) how to handle the subsequent multi-year rally e.g. how not to sell out too soon, how to handle corrections, how much to allocate
v) the best trading vehicles for playing the sector, maximising reward whilst minimising risk

I'm in the UK so more familiar with airlines here. One of my friends is in the industry and pretty knowledgeable. The three stocks I'd be most interested in are:

1) Ryanair (RYAAY, Nasdaq) - the lowest cost carrier in the developed world, with the best management and financial condition. If every airline went bust this would be the last one left. Basically the Dell Computer of the airline industry - just like in 2000-2003 Dell used its low cost base to go into a price war and kill off competition, Ryanair can do the same and should easily survive. They will also have excellent takeover opportunities if they wish to go that route, or buying other carriers assets out of bankruptcy. The only disadvantage is that the stock has not sold off as much as the other airlines.

2) Easyjet (EZJ.L) - another well-run budget airline, better service but not quite as efficient as Ryanair. They are basically the European/UK version of Southwest. One reason I like this stock is they are still well managed, with a decent brand and moderate costs, but the stock has been killed, down much more than Ryanair's.

3) British Airways (BAY.L) - probably the best run major carrier in Europe. Potentially could get state assistance in the event of a major meltdown.

Globally, I'd be interested in Southwest in America, Singapore Airlines in Asia, and some of the Chinese carriers. Anyone got any more local knowledge?
More...
 
these stocks are traded like they are already bankrupt

losing 90% of investment value is same as chapter 11 tax writeoff

[


QUOTE]Quote from wutangfinancial:

better to go long aerospace. I'm long ERJ. BA may hold some real value. Enough emerging market carriers will pick up the slack for falling demand, particularly for fuel efficient jetliners.

Airlines are always so speculative. ERJ and BA are real value investments. I'm aware that Steinhardt made a killing betting on airline consolidation. But that's real speculative.

I'm long ERJ, short CAL and UAUA, BTW. [/QUOTE]
 
airlines are in a commodity business.



Quote from palenimbus:

I'm in Europe as well (Germany). My opinion is that the airlines are like any extremely competitive business that needs a competitive edge to have pricing power. That's why in my opinion the major carriers are doing the best in these hard times. Flag carriers; Lufthansa, BA , Air France, Emirates etc have the brand power that attracts business travelers and higher value customers permitting them to charge higher fees.

As for the US market, I wouldn't touch it, I wouldn't be surprised if the entire industry is under bankruptcy protection in the very near future. I read somewhere that in the history of the US airline industry their net profits are negative.
More...
 
You must log in or register to reply here.
Back
Top