Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: Delta Airlines CEO Gerald Greenstein announced that although he plans to retire after Delta emerges from bankruptcy, he would consider staying on in the role of nonexecutive chairman in order for Delta to continue to benefit from his experience. Delta plans to emerge from bankruptcy during the first half of next year as an independent airline despite merger overtures from both United and US Air. Though analysts view mergers as an effective way to solve the industry’s overcapacity problem, strong labor unions and government regulations have complicated past mergers. Delta’s restructuring includes plans to expand international flights so that they will account for 40% of revenue. Delta’s international flights currently contribute 35% of total revenue, up from 20% last year. Legacy airlines are emphasizing international travel, as they are more profitable than their domestic routes which compete against the discount carriers. Delta is currently focused on adding European & African routes and is looking to become a presence in the Latin America and Asia markets.
Related Links: Lower Oil Helping Airlines • Airlines Vie for Lucrative New China Route • You Don't Have to be Crazy to Buy Airlines • BusinessWeek: Delta faces $4B in plane-lease claims
Potentially impacted stocks and ETFs: Airtran (AAI), Alaska Air (NYSE:ALK), AMR (AMR), Continental (NYSE:CAL), JetBlue (NASDAQ:JBLU), US Airways (LCC), Southwest (NYSE:LUV), Northwest (NWACQ), UAL (UAUA). ETF : iShares Dow Jones Transportation Index (NYSEARCA:IYT).
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