Mahesh Reddy

Why I'm Bullish On Airline Stocks

I concur....I been big on arlines...since end of 2005 right after the huricane katrina, I feel that was the bottom, which kind of coincided with oil hitting a first top and also the era of airfare price war gave way to collective price increases.....and this only helped companies bottom line, who at the just are fresh from cleaning their blance sheets by transfering/restructur... their liabilites. The margins started looking to improve and the valuations were so, low..they were selling something like at 20% their value...

I feel, the things like, comes once in a genarations...and some of the legacy carriers had a nice run...CAL, up 5 fold since sept 05, and four times in case of US AIR and AMR....

I know, LOW fare carriers did not fare that well, but, again their valuations were already high... only recently one low fare carrier,jetblue, is started to show some decent rally almost 50%, as the valuations look little cheaper...

2007 should be another good year for airlines, as the merger talk results in reduction in capacity and also airlines not being in any hurry to increase capacity, thus their margins will be intact or may go up and with oil prices coming down , i think, it will only add some extra buoancy for their already high flying stock prices.. .....