Yesterday we saw an amazing amount of information posted for several industries. The most talked about was the retail comps and that was somewhat unimpressive overall. On average, retail sales % change MOM fell 7.07%. The best numbers we saw were from Aeropostale Inc (ARO), The Buckle (BKE), TJX Corp (TJX) and Walgreen (WAG). The rest of the group continued to struggle with negative month over month sales.

The worst of the grouping was Abercrombie & Fitch Co (ANF) which had a decline of 32% MOM and following closely behind that disaster was Neiman Marcus Group Inc (Privately Held) with a 20% decline. Generally the best of the shops were discounters and those that were able to provide remarkable consumer value.

Allegiant Travel (ALGT), being an airline, unfortunately is painted with the same brush as the rest of the industry. Oil up = sell airlines. Consumer weak = sell airlines. All they do is continue to execute. When I compare the data, they are pushing out versus the legacy airlines. It seems like 2 completely different sectors. While it is hard to own a name that trades outside of its fundamentals, I suppose that is becoming the case more and more in the market. Allegiant posted its June / Q2 traffic figures earlier this week, and it continues to stand head and shoulders above its peers. Heck, with oil down dramatically, the stock might even be given a chance to go up based on its own metrics.

They say it’s not what you have but how you use it.

Alcoa (AA) has the aluminum, and reported 2Q09 results last night and Boeing (BA) uses aluminum to make planes and they’ve been plagued by a litany of problems in trying to get their new Dreamliner off the ground, literally, so I thought it would be worth a look at how things are going in getting from bauxite to business class.

WestJet Airlines (WJAVF.PK) and Air Canada (AIDIF.PK) continue to slug it out in the domestic airspace, but it looks like Canada's national air carrier will eventually lose out if it cannot find a solution to its higher costs relative to the competition.

Since Air Canada changed its management, the airline with notorious customer service has aggressively pursued a more pleasant travel experience while offering substantial discounts in an attempt to stave off bankruptcy.

Last summer, when the prospect of a General Motors (GMGMQ.PK) bankruptcy started to materialize, CEO Rick Wagoner was insistent: A Chapter 11 filing would be ruinous.

He was wrong, but not by a lot. GM and Chrysler are both still in business following unprecedented bankruptcy filings—but only thanks to billions in federal aid and government guarantees backing their products. And the two automakers will look quite different in their new incarnations. At GM, Wagoner is gone. His replacement, Fritz Henderson, has cut half of GM's eight divisions, leaving Chevrolet, Cadillac, Buick, and GMC. Chrysler is now owned by Italian automaker Fiat (FIATY.PK) and desperately awaiting fresh technology and new models needed to become competitive. Many current Chrysler models may simply disappear.

America might be in a recession, but the auto industry is in a depression.

Car sales so far this year are down 35 percent compared with 2008, and that was a bad year, too, on account of $4 gas and the start of the Great Recession. Auto sales in the United States peaked at nearly 17 million in 2006, and automakers used to consider 14 million in annual sales a bad year. In 2009, automakers will be lucky to sell 10 million vehicles.

Air France-KLM (AKH) posted another month of declining passenger traffic, joining British Airways. Shares in Air France-KLM fell 2.1% yesterday on the news that this was the sixth consecutive month where passenger numbers were down. The number of passengers carried fell 7% to 6.4 million and the load factor, a measure of how full an airline's planes are, slipped to 80.3% from 81.4%.

The short base for Air France-KLM (as measured by Percent Shares Outstanding on Loan) has risen 22% over the past month and now stands at 9.07% below the 52 Week high of 10.58% which was hit on June 24th 2009. The short base for Air France-KLM is higher than other European airline companies; British Airways (5.5%), Deutsche Lufthansa (2.7%) and Austrian Airlines (0.1%).

I have been looking forward to the Alcoa (AA) earnings report, due out later today, because of what it suggests about the economy. As the economy bottoms, the fortunes of cyclical companies that are leveraged to the overall state of the economy turn up. As Alcoa is the first company to report every earnings season and it is an cyclical basic industries company, its earnings report have been seen as an economic bellwether for some time. But is this set to change?

Alcoa Inc, whose results are traditionally viewed as an indicator of the country’s economic health, is expected to post a third consecutive quarterly loss this week.

Two things were clear at Tuesday morning's hearing of the Senate Banking Committee concerning green investments in public transportation. First, transportation experts and leading legislators are very much in agreement on how transportation spending should change. And second, Randal O'Toole's days as anything other than an anachronism are numbered.

The committee heard from five witnesses, one of which was Cato Institute fellow O'Toole. Also invited were Michael Replogle of the Institute for Transportation and Development Policy, Rutgers University urban planning professor Clinton Andrews, West Sacramento mayor Christopher Cabaldon, and Ernest Tollerson of the New York City MTA.

For more than a year now, the major airlines have backed a public-relations blitz against speculation in the crude oil markets. Jet fuel costs are airlines' biggest expense, and with prices soaring to a record last year, the carriers were looking for anything they could find to lower prices.

The anti-speculation move, which the carriers are ramping up again, is odd because airlines themselves engage in speculation to hedge against rising fuel prices. There's no futures market for jet fuel, so airlines typically buy call options in crude or heating oil to offset higher jet fuel prices. The Air Transport Association, an industry trade group, argues that this is different from speculation by, say, hedge funds simply looking to profit from rising prices.

Watch this video. This goes directly to the strategy at AutoNation (AN). The luxury auto market was dragged into the recession and will lead the auto market out. The length of time sales spend in it will be dwarfed by domestic and non-premium imports.


Just yesterday I wrote about AutoNation's Mercedes push. When I first spoke with CEO Mike Jackson last year, before the credit market imploded, he was stressing his desire to move the company away from domestic and into imports with a special emphasis on premium brands.

General Electric (GE) and Best Buy (BBY) were both viewed as the apple of investors’ eyes until the last few years. GE had a rock solid reputation for producing steady profits and dividends that were almost too good to believe, in the Bernard Madoff sense. Of course it’s unfair to call GE a Ponzi scheme, but the consistency of the company’s performance should have caused concern. At the opposite end of the spectrum, Best Buy grew like a rocket along with the housing and CD music booms.

Now GE’s appliance and lighting businesses have weakened with the housing bust, and financial services has become addicted to government guarantees to sell debt. The Wall Street Journal’s “Unable to Unload Limping Divisions, GE Invests in Propping Them Up” reports that GE has to renew investments to protect the survival of these consumer businesses it could not sell.

If you are working at Ford (F), it looks like the downturn in auto sales is ending. In June, sales fell only 11 percent over a year ago. Optimism does not permeate all of Detroit; General Motors (GM) sales feel 33 percent for the month; Chrysler, 48 percent. Even Toyota (TM) U.S. sales were down 32 percent June over June last year.

Ford is the only one of the Big Three Detroit auto makers that avoided bankruptcy and a federal bailout.

No one can ever claim Ryanair (RYAAY) isn’t creative. The European low cost airline (which has the largest international passenger volume in the world) is famous for its innovative approach to getting passengers from Point A to Point B … for very little money. For example in 2008, it offered 1 million seats for £0.01 each. The promotion was so successful, it crashed the company's website. And despite public outcries, it has yet to abandon the possibility of charging passengers for mid-flight visits to the bathroom.

In its latest move, it was reported yesterday that Ryanair’s “plans to cut costs by making fliers perch on stools with seatbelts around their waists. Chief executive Michael O’Leary has already held talks with US plane manufacturer Boeing about designing an aircraft with standing room.” The motives for the move are clear, since “Ryanair estimates it would be able to pack in 30 per cent more passengers while slashing costs by 20 per cent.”

Q2 2009 Earnings Call

July 7, 2009 9:00 am ET

“Oshkosh, we talked about last week when we got that billion dollar contract for our troops over in Afghanistan, getting yet another buy rating. By the way, this stock year to date up nearly 125%.” Fox Business Network 7/6/2009

Canada's top budget air carrier WestJet Airlines (WJAVF.PK) released disappointing June load factor results Monday, but Versant Partners is looking ahead to the expected 2010 recovery and expects the airline to lead the way.

WestJet reported a load factor of 72.9% for June, less than the 76.5% posted in the same period last year. Overall second-quarter results came in at 76.1%, also less than the 79.5% recorded in 2008 and slightly behind Versant's forecast of 77%.

By John N. Simon

Boeing (BA) released its commercial deliveries and (lack thereof) orders information for the six-month period ended June 30, 2009.