Analyst: 2009 is good for airlines
The year 2009 will bring a dose of optimism to major U.S. airline carriers due to the effects of lower oil prices, falling domestic capacity and revenue-per-available-seat-mile growth, senior analyst Michael Derchin with FTN Midwest Securities Corp. said.
Derchin added that weaker carriers have already been forced to close operations, a sign that weaker carriers are leaving the marketplace.
Derchin added that the Delta Air Lines Inc.-Northwest Airlines Corp. merger along with consolidation and a tightening in airline capacity nationwide have created a situation where the airlines stand to profit from higher fares and the elimination of inefficient flights.
Atlanta-based Delta (NYSE: DAL) received approval to merge Oct american cash advance. 29 with Eagan, Minn.-based Northwest (NYSE: NWA). Combined the carriers have made cuts in domestic capacity of about 15 percent, though international capacity is up.
Derchin predicts that with all factors considered, the airline industry is in-line to record a small profit in the fourth quarter of 2008. He counts Dallas-Fort Worth-based AMR Corp. (NYSE: AMR), the parent of American Airlines among his favorites in the new year, as well as Dallas-based Southwest Airlines (NYSE: LUV).